Tesla share price gets into gear after company posts third-quarter profit

Tesla finally posts a profit

Tesla finally posts a profit

Tesla CEO Elon Musk announced his company's plans to join the self driving vehicle market after a better-than-expected Q3 earnings report.

But the company is also facing criticism that it overspent to hit production targets for its Model 3 sedan. The SEC sued him for fraud, calling his claims "false and misleading", before reaching a settlement. If Tesla spends $1 billion on a new factory, the full $1 billion will be counted against free cash flow in the next quarterly statement. It's still nowhere close to generating revenue and earnings to contend with the likes of Toyota Motor Corp. or BMW AG.

"Simply put, deliveries and earnings are the only battles that matter", stated Gene Munster, an analyst with firm Loup Ventures.

Tesla actually bumped its reporting date by almost two weeks, Forbes reports, while many observers believed it meant the company had good news, or that it didn't want to be buried under the coverage of US midterm elections.

The report of a criminal probe comes as Tesla's business is gaining momentum. Model 3 margins first turned "slightly positive" in the second quarter, Tesla said, after months of manufacturing problems. He opened by calling on executives responsible for efforts ranging from artificial intelligence and Autopilot to workplace safety, leaving less time than usual for the question-and-answer session with analysts.

Tesla, Inc shares were trading at $314.86 per share on Thursday afternoon, up $26.36 (+9.14%). Tesla achieved positive cash flow in late 2013, mid-2016, and now in mid-2018.

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The quarter "marks an inflection point", said Joe Dennison, associate portfolio manager of Zevenbergen Capital Investments in Seattle. Despite logistic and delivery issues, Tesla said the Model 3 was the best-selling auto in the U.S.in terms of revenue and 5th in terms of volume.

Tesla is also hard at work on a computer chip that will dramatically increase self-driving capabilities in its cars. Specifically, its sources said investigators are "homing in on whether the company made projections about its Model 3 production knowing it would be impossible to meet the goals". One such circumstance the company will have to muddle through in the coming quarters will be trade tensions involving China. Tesla's target of delivering 100,000 Model S and X vehicles remains the same.

The stakes won't be so high for Tesla as it launches its next few products.

"We can actually be cash flow positive and profitable in all quarters going forward", Musk said, suggesting that the previous quarter's financial results show a sign of things to come.

"As much as you can't believe you are reading this, we can't believe we are writing this", Citron wrote. The starting price for the Model 3 was United States dollars 49,000 in the quarter, but the Company is working to bring the price to USD 35,000.

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