Tesla investors, like these at Battery Day, didn’t drive up the stock price despite record Q3 results.
Even when Tesla wins it can’t win with shareholders these days as the EV maker’s stock got only a small bump the day after it posted record earnings results and reported it would begin building vehicles at two new plants next year, pushing production levels to nearly 1 million vehicles in 2021.
Tesla’s stock closed at $422.64 Wednesday before it held its third-quarter earnings call. After opening at 441.92, the price has slid into the high $420 range – somehow that seems like something CEO Elon Musk would giggle about – in late-morning trading.
The company set new records for its financial performance. It reported adjusted EBITDA came in at $1.8 billion on revenue of $8.7 billion, both were up 67% and 39% respectively. Its adjusted EBITDA margin came in at 20.6%, while the automaker’s net income was $331 million, good for a 131% increase compared with the year-ago result. The company also boosted its total cash and cash equivalents to $14.5 billion from $8.6 billion last quarter.
(Tesla posts big profit, revenue for third quarter; beats analysts expectations.)
CEO Elon Musk, celebrating with Texas Gov. Greg Abbott of Texas on the left, revealed that the Austin, Texas plant would deliver vehicles next year.
Analysts on average expected Tesla to report net income of $593 million in the third quarter on revenue of $8.4 billion, according to Refinitiv data, so CEO Elon Musk and Tesla investors can delight in exceeding those estimates.
“This is really due to the amazing execution by the team could not be more proud to work with such a great group of people, just really a kick-ass performance across throughout the board,” Musk said during the earnings call.
While shareholders may not be driving up the stock price on the news, the California-based EV maker made an impression on the Baird and JMP Securities analysts to earn upgrades from them. Baird moved Tesla from neutral to outperform, setting a 12-month target price at $488 a share, which is up from $450. Meanwhile JMP raised it to market outperform from market perform, making the target price $516 a share.
(Tesla, GMC and Land Rover offer “Ideal” vehicles, finds new study.)
The record-level financials weren’t the only positives the company doled out during the call. Tesla CFO Zach Kirkhorn confirmed that the company expects to reach 500,000 deliveries in 2020.
“We’re all also aiming to achieve our original 2020 guidance of 500,000 deliveries,” he said. “Despite the operational interruptions early on in the year. While this goal remains a genuine challenge, we believe it’s possible the tight execution of the company.”
Musk confirmed that the company could produce as many as 1 million vehicles in 2021 with the addition of the plants in Germany and Texas.
Musk also noted that the company expects to begin delivering vehicles from its plant outside Berlin, Germany as well as its newest site near Austin, Texas. The Austin deliveries is a bit of news as the company hadn’t previously confirmed that the site would be up and running in time to deliver vehicles. He tempered expectations about the output saying, “It will start off very slow at first,” but then would accelerate, following an S-Curve.
“I think most people that don’t spend a lot of time around manufacturing kind of things that once you have a factory you can just sort of turn it on and add capacity,” he said, “but it will typically take that 18 months to reach capacity. And that is a very fast period of time, especially for new technology. So I say 12 to 24 months even (before it’s at full capacity).”
(Tesla shipping Model 3 sedans from Shanghai to Europe.)
Regardless, the company expects to produce at least 850,000 vehicles in 2021, and possibly as many as 1 million with the opening of the two new facilities, Musk confirmed after Kirkhorn initially deferred answering the question saying its 2021 guidance would come during the next earnings call.