Meet the new, profitable, Tesla

Over the last 10 years Tesla CEO Elon Musk has been promising Wall Street that his electric car company woul...

Posted: Oct 26, 2018 3:22 PM
Updated: Oct 26, 2018 3:22 PM

Over the last 10 years Tesla CEO Elon Musk has been promising Wall Street that his electric car company would eventually make money.

Wednesday he finally made good on that promise. Shares closed up 9% Thursday after the company posted its best quarter ever the previous evening.

Banking, finance and investments

Business figures

Business, economy and trade

Companies

Company activities and management

Company earnings

Elon Musk

Financial markets and investing

Financial performance and reports

Financial results

Securities trading

Stock markets

Tesla Inc

Automakers and manufacturing

Automotive industry

Business and industry sectors

The big question now is whether the company can remain profitable.

Tesla's strong report showed that overall manufacturing costs for each vehicle declined by 30%. The number hours it takes to build each car fell too.

That was enough for skeptical Tesla analyst Garrett Nelson to change his tune.

"The results look to be sustainable going forward," the CFRA Research analyst said.

Nelson upgraded his recommendation on the stock after the earnings report. He said he is now confident that Telsa will be able to continue to reduce its costs.

Tesla's (TSLA) stock had lost about a third of its value since hitting a record high of $385 a year ago.

The stock has been dogged by concerns that the company couldn't hit production targets, was burning through too much cash and was facing looming debt payments.

Musk promised investors for months that the company would be profitable in the second half of 2018, but Wall Street had become very skeptical.

"We had our doubts," Nelson said. "This is a company that has a long history of overpromising and under delivering."

Tesla's profitability comes just in the nick of time because $1.7 billion in debt is due by November of next year.

The company that was burning through funds reported that its cash reserves increased by $731 million during the quarter.

Musk told analysts that going forward, his company will be adding to its cash reserves instead of burning through money to boost production.

"I said before that we must prove that Tesla can be sustainably profitable," he told analysts Wednesday. "This quarter was an important step towards that and I'm incredibly excited about what lies ahead."

Gene Munster, a leading tech analyst with Loup Ventures, said its good to see the focus return to Tesla's business and not on Musk's erratic behavior.

In August, Musk tweeted a plan to take the company private, only to drop the plan less than three weeks later. The Securities and Exchange Commission fined him $20 million and required him to give up the chairman post because of a false statement that he had "funding secured" for such a move when he did not.

Musk also drank alcohol and smoked pot on a podcast, maligned a man who helped in the rescue of a Thai soccer team trapped in a cave, and lambasted analysts on a conference call.

The behavior spooked many investors, and Munster said he's not sure the great quarter will be enough by itself to convince everyone that the company is a safe investment.

"I think it was the important step they've taken, but we're not out of the woods yet," Munster said.

Morgan Stanley auto analyst Adam Jonas, who still has a neutral rating on the stock, said that he and other investors will want to see Tesla repeat this performance in the fourth quarter and beyond before the stock can regain some of the ground it lost in the last year.

But even one of Tesla's harsher critics has said he expects that Tesla's stock will now start to regain lost ground. John Thompson CEO of hedge fund Vilas Capital Management, said he has now closed his short positions which bet on a continued decline in the price of the stock.

"My estimates of their demise have been greatly exaggerated," he said. "In the long run it doesn't change anything. But in the short run they've pulled the rabbit out the hat."

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 604184

Reported Deaths: 7620
CountyCasesDeaths
Hennepin1248631774
Ramsey52480895
Dakota46804470
Anoka42746458
Washington27416291
Stearns22552224
St. Louis18137312
Scott17548135
Wright16370149
Olmsted13391102
Sherburne1201295
Carver1066448
Clay825892
Rice8196110
Blue Earth762543
Crow Wing681594
Kandiyohi667885
Chisago619752
Otter Tail585884
Benton582998
Goodhue483874
Douglas475381
Mower470733
Winona461251
Itasca459263
Isanti439964
McLeod430361
Morrison424662
Nobles407950
Beltrami407561
Steele397616
Polk389072
Becker386655
Lyon363853
Carlton352756
Freeborn346932
Pine335023
Nicollet331045
Mille Lacs311654
Brown307840
Le Sueur297226
Cass286032
Todd285632
Meeker263142
Waseca238023
Martin235332
Roseau211021
Wabasha20783
Hubbard196441
Dodge18783
Renville182446
Redwood176338
Houston174616
Cottonwood167124
Wadena162823
Fillmore157410
Faribault154419
Chippewa153938
Pennington153820
Kanabec146828
Sibley146810
Aitkin138837
Watonwan13579
Rock128719
Jackson122612
Pipestone116726
Yellow Medicine114920
Pope11296
Murray107010
Swift106918
Koochiching95217
Stevens92411
Clearwater89016
Marshall88817
Wilkin83213
Lake83120
Lac qui Parle75622
Big Stone6044
Grant5938
Lincoln5843
Mahnomen5669
Norman5479
Kittson49022
Unassigned48293
Red Lake4017
Traverse3775
Lake of the Woods3453
Cook1720

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 370914

Reported Deaths: 6048
CountyCasesDeaths
Polk58232640
Linn21204339
Scott20306247
Black Hawk16119312
Woodbury15238230
Johnson1461585
Dubuque13506211
Dallas1128999
Pottawattamie11223174
Story1071448
Warren583991
Clinton561493
Cerro Gordo553593
Sioux517074
Webster515494
Muscatine4880106
Marshall486676
Des Moines467271
Wapello4337122
Buena Vista426940
Jasper421172
Plymouth402981
Lee382356
Marion366076
Jones300957
Henry294637
Bremer288261
Carroll286852
Crawford268540
Boone268434
Benton259655
Washington256751
Dickinson249344
Mahaska232351
Jackson225242
Clay216627
Kossuth216166
Tama211871
Delaware210943
Winneshiek198535
Page194522
Buchanan193733
Cedar192223
Hardin187444
Fayette186543
Wright185940
Hamilton181851
Harrison179973
Clayton171057
Butler166235
Madison164619
Mills163724
Floyd163342
Cherokee159338
Lyon158841
Poweshiek157036
Allamakee152652
Hancock150234
Iowa149824
Winnebago144531
Cass139255
Calhoun138913
Grundy137333
Emmet135841
Jefferson133435
Shelby131537
Sac130920
Union129935
Louisa129749
Appanoose129049
Mitchell126643
Chickasaw124717
Franklin123323
Guthrie123232
Humboldt119626
Palo Alto113523
Howard104922
Montgomery103638
Clarke100924
Keokuk96532
Monroe96330
Unassigned9560
Ida91535
Adair87332
Pocahontas85822
Davis85225
Monona82931
Osceola78916
Greene78011
Lucas77923
Worth7598
Taylor66812
Fremont6269
Decatur6169
Van Buren56418
Ringgold56324
Wayne54423
Audubon53411
Adams3444
Rochester
Clear
85° wxIcon
Hi: 89° Lo: 61°
Feels Like: 83°
Mason City
Clear
86° wxIcon
Hi: 90° Lo: 64°
Feels Like: 84°
Albert Lea
Partly Cloudy
84° wxIcon
Hi: 90° Lo: 61°
Feels Like: 82°
Austin
Partly Cloudy
86° wxIcon
Hi: 90° Lo: 62°
Feels Like: 84°
Charles City
Partly Cloudy
82° wxIcon
Hi: 90° Lo: 65°
Feels Like: 82°
Father's Day is looking rather stormy
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Aaron's Friday Night Forecast (6/18/21)

Image

Family Service Rochester looking for volunteers

Image

Rochester Preps

Image

Hole In One

Image

Vaccine rate slowing in MN

Image

Minnesota DNR says we can all double-down on water safety this year

Image

There's a nationwide blood shortage

Image

Juneteenth is now a federal holiday

Image

Aaron's Friday Forecast (6/18/21)

Image

Runner attacked by deer on Austin trail

Community Events