Quick Note: Tesla Delivers Strong Q3; Leaves Guidance Unchanged
Revenue and profit topped market estimates; forward guidance remained vaguely positive—but not increased. Cost management was amazing—too good to be true?
Tesla (TSLA) reported third quarter revenue up 57% to $13.8 billion, just missing my $14 billion (up 60%) estimate. Net Income was $1.6 billion versus my $1.33 billion estimate and $331 million reported last year.
There’s a lot to unpack, but here are some highlights:
Auto sales revenue was up a strong 59% to $11.67 billion, just shy of my $11.76 billion (up 60%) estimate due to a wider than expected 6% drop in average sales price/car. More to dive into here.
Auto segment gross margin jumped to 30.5%, up a stunning 281 bps y/y. Good news for Tesla, but also…what? This doesn’t seem to fit with fading prices and rising costs for materials and shipping. Given the notoriously poor build quality and reliability of its cars, I get uncomfortable with Tesla cuts corners.
Tesla seemed to suggest Berlin production may not start until very late in the year, pushing out prospects even further for meaningful contribution before yearend.
This and Model 3’s fading results in Q3 in Europe and China (as I have warned in previous reports) may explain why management didn’t boost guidance as the market expected even after two straight record quarters of legitimate profitability.
I have ideas about many of these questions, more questions, and more ideas. Look for more discussion and an updated model in my upcoming report.
Stay tuned.
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