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Oct 20, 2021

Tesla shows progress on profit as investors seek perfection

Tesla is a stock that will be 4 digits as we go into next year: Wedbush Securities' Ives

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Tesla Inc. reported revenue that fell short of Wall Street estimates, but managed to beat third-quarter profit projections despite a semiconductor shortage and supply-chain challenges that have stymied competing automakers.

Sales at Elon Musk’s electric-vehicle and clean-energy company rose 57 per cent to US$13.8 billion, missing estimates of US$13.9 billion. Earnings came to US$1.86 a share on an adjusted basis, the Palo Alto, California-based automaker said Wednesday. That beat the US$1.67 a share average of analysts’ estimates.

The results mark the ninth straight quarter of profit for the 18-year-old electric carmaker and came despite obstacles that included backups at ports and even rolling blackouts that made it tough to keep factories operating at full capacity.

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“A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed,” Tesla said in its statement. “We believe our supply chain, engineering and production teams have been dealing with these global challenges with ingenuity, agility and flexibility.”

Shares of Tesla were down less than 1 per cent in extended market trading. They were little changed at US$865.80 at the close in New York and have gained 23 per cent this year.

The company’s automotive gross margin, a key gauge of profitability, widened to 28.8 per cent in the latest quarter when regulatory credits are excluded. 

“The stock is zig-zagging because this was expected,” said Gene Munster of Loup Ventures. “But they are making a lot of progress when it comes to profitability.”

Tesla is expanding on three continents and is nearing completion of new factories in Austin, Texas, and Berlin. At its shareholder meeting earlier this month, Chief Executive Officer and top stockholder Musk said his company will move its corporate headquarters to Austin, without giving a date. 

Tesla delivered 241,300 cars worldwide in the third quarter, a record for the company. Tesla currently makes the Model S, X, 3 and Y at its factory in Fremont, California, and the Model 3 and Y at its plant in Shanghai. More than 96 per cent of sales in the quarter were the Model 3 and Y. 

Revenue from regulatory credits came to US$279 million, Tesla said, down from US$354 million three months earlier. The company also reported a US$51 million Bitcoin impairment.