Investor's Corner
Tesla crushes Q3 2019 results and returns to profitability
Tesla’s (NASDAQ:TSLA) third-quarter earnings for 2019 saw the electric car maker post $6.3 billion in revenue, meeting Wall Street estimates. The results, which were discussed at length in an Update Letter, were released after the closing bell on Wednesday, October 23.
The following are the key points in Tesla’s Q3 Update Letter.
EARNINGS
Tesla shareholders saw earnings per share of $1.91. In contrast, analysts polled by FactSet expected Tesla to report an adjusted quarterly loss of $0.46 a share for Q3 2019. Estimize, a crowdsourced platform that aggregates estimates from analysts, executives, fund managers, and academics, expected Tesla to report an adjusted loss of $0.29 per share.
REVENUE
Tesla reported revenue of $6.3 billion for the third quarter. Analysts polled by FactSet expected Tesla to report sales of $6.45 billion in the third quarter, while Estimize placed Tesla at a slightly more optimistic $6.60 billion.
Tesla Q3 results:
– Shanghai Giga ahead of schedule
– Model Y ahead of schedule
– Solar installs +48% from Q2
– GAAP profitable
– Positive free cash flow— Elon Musk (@elonmusk) October 23, 2019
RELATED: Top 5 things Tesla (TSLA) investors want to know from the Q3 2019 earnings call
Overall, Tesla’s results are a pleasant surprise for supporters of the electric car maker. Even CEO Elon Musk, after all, proved tempered with his expectations for the third quarter, stating during the second-quarter earnings call that he expects a small loss in Q3 2019. The company’s vehicle delivery figures in Q3 did not help this case, as the company was unable to meet Elon Musk’s internal goal of delivering 100,000 electric cars in the third quarter, delivering around 97,000 vehicles during the quarter.
TESLA MODEL Y PRODUCTION
Apart from its encouraging financials, Tesla also shared a number of optimistic updates for its vehicles and its budding Energy business. The Model Y, a crossover SUV that is expected to be even more popular than the widely-successful Tesla Model 3, has had its estimated deliveries move up to Summer 2020. During the vehicle’s unveiling, Musk proved conservative, giving an estimate of Fall 2020 (about a year from now) for the Model Y to begin customer deliveries.
GIGAFACTORY 3 PROGRESS
Tesla has also confirmed reports from China that Gigafactory 3 is progressing ahead of schedule. Previous reports from local media outlets have already hinted at this in recent months, and Tesla’s validation of these reports proved enough to shift the narrative back into the electric car maker’s favor.
“We are already producing full vehicles on a trial basis, from body, to paint and to general assembly, at Gigafactory Shanghai. We have cleared initial milestones toward our manufacturing license and are working towards finalizing the license and meeting other governmental requirements before we begin ramping production and delivery of vehicles from Shanghai,” Tesla stated.
TESLA SOLAR
Tesla’s Energy business also showed some growth in the third quarter. Long dormant and tempered compared to the company’s electric vehicle business, Tesla Energy has long been considered by skeptics as a neglected project. This has changed in the third quarter, with Tesla Solar installs moving up 48% compared to Q2 2019’s figures. These installations are further bolstered by new initiatives relating to the company’s energy business, such as the introduction of the Megapack, a massive 3 MW battery that could prove to be as disruptive as Tesla’s electric cars.
TESLA SEMI and GIGAFACTORY EUROPE
Tesla has been quite thin on updates surrounding the Tesla Semi, having focused more on Model 3. In its Q3 Update Letter, Tesla revealed that its all-electric long-hauler is poised to begin production in late 2020. An official announcement about the location of Gigafactory 4 in Europe is also expected to be released in 2021. “We are planning to produce limited volumes of Tesla Semi in 2020 and are hoping to announce soon the location of our European Gigafactory for production in 2021,” Tesla wrote.
As of writing, Tesla stock is up 21.03% at $ 308.25 per share in Thursday’s after-hours trading.
Following is Tesla’s Q3 2019 Update Letter.
Tesla Q3’19 Update Letter by Simon Alvarez on Scribd
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
Investor's Corner
Tesla wins $508 price target from Stifel as Robotaxi rollout gains speed
The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Tesla received another round of bullish analyst updates this week, led by Stifel, raising its price target to $508 from $483 while reaffirming a “Buy” rating. The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Robotaxi rollout, FSD updates, and new affordable cars
Stifel expects Tesla’s robotaxi fleet to expand into 8–10 major metropolitan areas by the end of 2025, including Austin, where early deployments without safety drivers are targeted before year-end. Additional markets under evaluation include Nevada, Florida, and Arizona, as noted in an Investing.com report. The firm also highlighted strong early performance for FSD Version 14, with upcoming releases adding new “reasoning capabilities” designed to improve complex decision-making using full 360-degree vision.
Tesla has also taken steps to offset the loss of U.S. EV tax credits by launching the Model Y Standard and Model 3 Standard at $39,990 and $36,990, Stifel noted. Both vehicles deliver more than 300 miles of range and are positioned to sustain demand despite shifting incentives. Stifel raised its EBITDA forecasts to $14.9 billion for 2025 and $19.5 billion for 2026, assigning partial valuation weightings to Tesla’s FSD, robotaxi, and Optimus initiatives.
TD Cowen also places an optimistic price target
TD Cowen reiterated its Buy rating with a $509 price target after a research tour of Giga Texas, citing production scale and operational execution as key strengths. The firm posted its optimistic price target following a recent Mobility Bus tour in Austin. The tour included a visit to Giga Texas, which offered fresh insights into the company’s operations and prospects.
Additional analyst movements include Truist Securities maintaining its Hold rating following shareholder approval of Elon Musk’s compensation plan, viewing the vote as reducing leadership uncertainty.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
Investor's Corner
Tesla receives major institutional boost with Nomura’s rising stake
The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Tesla (NASDAQ:TSLA) has gained fresh institutional support, with Nomura Asset Management expanding its position in the automaker.
Nomura boosted its Tesla holdings by 4.2%, adding 47,674 shares and bringing its total position to more than 1.17 million shares valued at roughly $373.6 million. The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Institutional investors and TSLA
Nomura’s filing was released alongside several other fund updates. Brighton Jones LLC boosted its holdings by 11.8%, as noted in a MarketBeat report, and Revolve Wealth Partners lifted its TSLA position by 21.2%. Bison Wealth increased its Tesla stake by 52.2%, AMG National Trust Bank increased its position in shares of Tesla by 11.8%, and FAS Wealth Partners increased its TSLA holdings by 22.1%. About 66% of all outstanding Tesla shares are now owned by institutional investors.
The buying comes shortly after Tesla reported better-than-expected quarterly earnings, posting $0.50 per share compared with the $0.48 consensus. Revenue reached $28.10 billion, topping Wall Street’s $24.98 billion estimate. Despite the earnings beat, Tesla continues to trade at a steep premium relative to peers, with a market cap hovering around $1.34 trillion and a price-to-earnings ratio near 270.
Recent insider sales
Some Tesla insiders have sold stock as of late. CFO Vaibhav Taneja sold 2,606 shares in early September for just over $918,000, reducing his personal stake by about 21%. Director James R. Murdoch executed a far larger sale, offloading 120,000 shares for roughly $42 million and trimming his holdings by nearly 15%. Over the past three months, Tesla insiders have collectively sold 202,606 shares valued at approximately $75.6 million, as per SEC disclosures.
Tesla is currently entering its next phase of growth, and if it is successful, it could very well become the world’s most valuable company as a result. The company has several high-profile projects expected to be rolled out in the coming years, including Optimus, the humanoid robot, and the Cybercab, an autonomous two-seater with the potential to change the face of roads across the globe.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
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