Please ensure Javascript is enabled for purposes of website accessibility

Tesla Posts Another Quarterly Profit

By Daniel Sparks - Updated Apr 24, 2019 at 10:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Soaring Model 3 sales and a strong gross margin for the vehicle helped the electric-car maker report another profit and strengthen its balance sheet.

After swinging to a profit in its third quarter of 2018, Tesla (TSLA 1.24%) just posted another quarterly profit. The profit was achieved with the help of a triple-digit year-over-year growth rate in automotive revenue and a strong gross margin on its high-volume Model 3. The quarter capped off a pivotal year for the company in which production capacity, deliveries, and revenue soared.

Here's a look at some of the key takeaways from the quarter.

A red Model 3

Model 3. Image source: Tesla.

Tesla's fourth-quarter results: The raw numbers

Metric

Q4 2018

Q4 2017

Change

Vehicle deliveries

90,966

29,862

205%

Revenue

$7.2 billion

$3.3 billion

120%

Earnings per share

$0.78

($4.01)

N/A

Data source: Tesla 2018 fourth-quarter shareholder letter.

Tesla's top line soared 120% year over year in the company's fourth quarter to $7.2 billion. This growth was primarily attributable to the company's ramp-up of Model 3 production and deliveries.

The company's bottom line for the quarter was $139 million, or $0.78 on a per-share basis. This is up significantly from a loss of $4.01 in the year-ago quarter. Non-GAAP earnings per share for the period was $1.93, up from a loss per share of $3.04 in the year-ago quarter.

Highlights

  • Model 3 deliveries during the quarter were 63,359, up from 1,542 in the year-ago quarter and 56,065 in Tesla's third quarter of 2018.
  • Measured by revenue, Model 3 was the best-selling passenger car in the U.S. in both Q3 and Q4.
  • Free cash flow for the quarter was $910 million, up from $881 million in the third quarter of 2018, and from negative free cash flow of $277 million in the year-ago quarter.
  • Tesla's gross margin on its Model 3 was above 20%, or flat compared to the vehicle's gross margin in the company's third quarter.
  • Tesla's cash position increased by $718 million sequentially to $3.7 billion.

Looking ahead

In 2019, Tesla expects to deliver between 360,000 and 400,000 vehicles, up 45% to 65% from deliveries in 2018. Management anticipates the Model 3 driving this growth in deliveries.

"Model 3 production volumes in Fremont should gradually continue to grow throughout 2019 and reach a sustained rate of 7,000 units per week by the end of the year," Tesla said in its fourth-quarter shareholder letter. "We are planning to continue to produce Model 3 vehicles at maximum production rates throughout 2019."

In terms of the company's profitability, Tesla says its "optimistic target is to achieve a very small GAAP net income in Q1," but it expects to be profitable on a GAAP and free-cash-flow basis beyond its first quarter.

Notably, the company is also on track with its plans to pay off debt. "In the second half of 2018, our cash position improved by $1.45 billion despite the scheduled repayment of a $230 million convertible bond in Q4," Tesla said. "We have sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019."

Check out the latest Tesla earnings call transcript.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$681.79 (1.24%) $8.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.