Tesla shares surge as Musk delivers quarterly profit
- Author: Wendy Palmer Oct 28, 2018,
Oct 28, 2018, 0:42
"Once they are at scale of BMW, they will be significantly more profitable than" BMW. "This was the breakthrough quarter where they're now showing significant improvement".
In early 2017, the Palo Alto -based company announced plans to produce up to 5,000 Model Three' s a week by the end of that year.
Musk also could face questions later on Wednesday about whether the company will introduce its long-promised $35,000 Model 3, which Bernstein analyst Toni Sacconaghi said was a double-edged sword: if Tesla does not, some customers will be angry, and if it does, margins likely will be further pressured. It also seems to have moved on from intermittent delivery problems it experienced in September. The company manufactured fewer than 2,700 of the cars all of past year.
In order to increase the affordability of the Model 3, Tesla accelerated its manufacturing timeline in China. In addition to its auto assembly plant in Fresno, California, Tesla owns the Gigafactory in Nevada, where it produces vehicle batteries.
Other analysts believe that Tesla has indeed turned a corner and is on a growth path.
"The product I'm genuinely most excited about is the Tesla semi", he said without providing more insight about the new semi truck.
Though he mentioned his average time goal is under ten days, he emphasized it was a goal and not a promise, unlike the one he made on its Model 3 vehicle. The luxury Model S outsold Mercedes.
New Street Research placed a 12-month price target of $530 on Tesla and sees it reaching $1,200 to $2,000 by 2025.
Citron Research, which had bet against Tesla stock for years, wrote in a note posted on its website that the company is destroying the competition.
Tesla will provide its own fleet of company-owned cars for customers to hail, as well as maintain a network of Tesla owners who can make money by lending out their cars for use and recalling them for personal use at will (like home-sharing service Airbnb).
"Consumers are coming up for lease renewal or new vehicle decision and opting into a Tesla - it is not just pent up demand", Left wrote.
The quarterly profit and higher cash generation advised Musk that Tesla can establish sustainable profits, without needing to constantly raise additional funds to pay towards debt and fund capital expansion.
But even if he were to revert to his old ways, Musk likely wouldn't present an existential threat to Tesla. The Securities and Exchange Commission, as it looks into whether Musk violated securities laws by claiming he had funding for the maneuver.
Musk meanwhile will be replaced as Tesla's chairman imminently after a ruling from the SEC that also saw the South African-born entrepreneur hit with a fine of $20 million (£15.6 million). What that means for Tesla isn't clear just yet, as the focus right now is on production, China and profitability.