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Tesla Beats Profit Estimates as EV Demand Rebounds
Adjusted Earnings Top Analyst Expectations as Automaker and Technology Company Cites Growth in Asia and the Americas
Tesla Inc. beat Wall Street’s profit expectations to start the year as the automaker said demand for its electric vehicles is rebounding around the globe, hinting at a possible recovery for its long-struggling automotive business.
Adjusted earnings rose to 41 cents a share in the first quarter, the company said April 22 in a statement, higher than the 34-cent average of analyst estimates compiled by Bloomberg. It’s the second straight quarter Tesla’s earnings have exceeded expectations.
The shares rose 4% at 4:48 p.m. after the close of regular trading in New York. The stock has declined 21% from a record high in mid-December.
Tesla said it “saw continued growth in demand for our vehicles” in parts of Asia and South America, along with a rebound in North America and the Europe-Middle East region. The surprisingly optimistic comments come several weeks after the automaker reported one of its worst quarters of auto sales in years.
The report “confirms that while the legacy EV business is no longer growing rapidly, it’s stable enough to fund Tesla’s heavy investments in robotics and self-driving technology,” Andrew Rocco, a Zacks Investment Research analyst, said in a note.
The trajectory of Tesla’s core automotive business has been a watch point for investors as CEO Elon Musk has reoriented the company around new business lines, including robotics and driverless cars. Tesla is working to ramp up production as part of a more than $20 billion spending plan this year.
For the first three months of the year, however, Tesla spent less than $2.5 billion — roughly half the outlay the company will need to average per quarter to reach its expenditure forecast for the year. This contributed to Tesla posting $1.4 billion in positive free cash flow for the quarter, far better than analysts’ expectation that the carmaker would burn through almost $1.9 billion.
Tesla said it remains on track to start making key products, including Cybercab, Semi and an updated version of its Megapack battery storage system.
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“The car business improved, and there is nothing that disrupts the futurism that juices Tesla’s valuation,” Interactive Brokers Chief Strategist Steve Sosnick said.
