Idle Tesla Supercharger stations in Sant Cugat, Spain.
Tesla posted first-quarter earnings that topped analysts’ expectations a day after CEO Elon Musk tweeted Trump-style attacks of the extended COVID-19 shutdown that idled his California plant for over a month. The better-than-expected results were powered by regulatory credit sales worth $354 million, but also marked the first time Tesla has remained in the black for three consecutive quarters.
The electric-car maker said it had GAAP-based earnings per share of 9 cents for the quarter that ended March 31, or $1.24 per share excluding certain items. That beat consensus expectations for a loss of 37 cents a share. Quarterly revenue was $5.99 billion, up 32% from a year ago. Tesla shares, which have been on a tear over the past month, rose more than 7% in after-hours Nasdaq trading to $862, after closing up 4% at $800.51.
“Q1 2020 was the first time in our history that we achieved a positive GAAP net income in the seasonally weak first quarter,” Tesla said in a letter to investors on Wednesday. “Despite global operational challenges, we were able to achieve our best first quarter for both production and deliveries.”
The results and subsequent share price rise appear to ensure that Musk will meet the final requirements early next week to qualify for a massive stock-based payout that will be worth more than $600 million. To receive that, Tesla’s market capitalization must stay at an average of $100 billion for both six-month and 30-day periods.
(For more, see Elon Musk May Bank The Biggest Payday Of His Life During Global Pandemic)
Musk has targeted sales of at least 500,000 vehicles this year, though the company didn’t confirm if that goal will still be attained. “We have the capacity installed to exceed 500,000 vehicle deliveries this year, despite announced production interruptions,” Tesla said. Still, “ for our US factories, it remains uncertain how quickly we and our suppliers will be able to ramp production after resuming operations.
Barclays analyst Brian Johnson, who’d estimated Tesla would post earnings of 61 cents per share for the quarter, predicted in a report this week that “an earnings beat, and reiteration of full-year delivery guidance would significantly advance the narrative and set up a possible fundraise shortly after the earnings announcement.”
The Palo Alto, California-based company this month reported deliveries and production that were up significantly from a year ago, hinting at today’s stronger results. The company delivered 88,400 vehicles to customers worldwide in the first three months of the year, up 40% from the year-earlier period and topping consensus expectations for just under 80,000 units. Production totaled 102,672, rising by a third from 77,100 in 2019’s first quarter. Tesla benefited from the addition of its new plant in Shanghai that opened in January and restarted production in February, prior to the idling of its Fremont, California, factory. Tesla has told employees that plant could resume some production by May 4.
Tesla once again got a big boost from sales of zero-emission and other pollution credits to automakers who mainly sell gasoline-powered vehicles and need them to meet U.S. and California regulations. The free money it received from these sales, which analysts can’t easily predict, jumped 64% from a year ago to $354 million.
With its main plant currently shut due to the health crisis, the bulk of its U.S. factory workers furloughed and a drop in overall demand for new vehicles as the economy weakens and unemployment surges, the second quarter may feel a much bigger hit.
The company was more upbeat in its assessment, however.
“Although impacted by inefficiencies related to the temporary suspension of production and deliveries in many locations, our gross margin remained strong. At Gigafactory Shanghai, further volume growth resulted in a material improvement in margins of locally made Model 3 vehicles,” Tesla said. “We are diligently managing working capital, reducing non-critical spend, and driving productivity improvements. We believe we are well-positioned to manage near-term uncertainty while achieving our long-term plans.”
(Updates to follow from Tesla’s conference call with analysts.)
