Tesla shares soar as Elon Musk delivers positive earnings, talks up China growth prospects

AdvertisementTeslaTechTesla shares soar as Elon Musk delivers positive earnings, talks up China growth prospectsTesla’s new factory in Shanghai has already started trial production on the

Model 3 sedanReading Time:3 minutesWhy you can trust SCMPBloombergPublished: 10:58am, 25 Oct 2019Updated: 10:58am, 25 Oct 2019 Elon Musk flipped the script on those who doubted Tesla could

return to profitability and meet aggressive timelines, delivering positive earnings few saw coming and declaring he is ahead of schedule on a China plant and new product.

Advertisement The electric-car maker earned US$1.86 a share in the third quarter, exceeding the most optimistic projection by a wide margin and beating the consensus estimate for a 24-cent

loss. On top of that, Musk peppered investors with positive updates: Tesla’s new factory in Shanghai is already starting production, the Model Y crossover will launch months earlier than

expected next year and the long languishing energy business is showing signs of life.

It all added up to a report that broke the mould for Musk, 48, who is notorious for setting stretch goals that take longer to pull off than he plans. Tesla still faces challenges: quarterly

revenue fell for the first time since 2012, and the company has posted the occasional profit in the past that it has been unable to sustain. But after reporting reined-in expenses that

padded gross profit margins, the shares climbed in pre-market trading to levels last seen almost eight months ago.

“If you look at the margins and the profitability, that’s the major feather in the cap for the bulls,” Dan Ives, an analyst at Wedbush Securities, said on Bloomberg Television. “If they can

maintain this, this could be a potential game changer for them going forward.”

Tesla shares soared 17 per cent to US$299.68 on Thursday. The stock was down 23 per cent this year through Wednesday’s close.

Trial output of the Model 3 is underway at the factory Tesla began building early this year on the outskirts of Shanghai. Producing the sedan locally enables Musk to charge less for the car

by avoiding import duties. The factory “opens up a whole new market” for the company, said Gene Munster, a managing partner at venture capital firm Loup Ventures.

Advertisement