What happened
Electric vehicle (EV) stock Proterra (PTRA +0.00%) zoomed higher on Thursday morning, surging 17.8% as of 1:30 p.m. EST as the market reacted to a surprise profit from the commercial EV powertrain company and a big contract it just won.
So what
Proterra doesn't just manufacture EV battery systems for commercial vehicles, but it also builds electric transit buses and charging solutions and software. Here are some notable numbers from Proterra's third quarter (all changes year over year):
- Battery production rose 95%.
- Battery system deliveries were up 144% to 78 vehicle sets.
- Electric transit bus deliveries increased 58% to 52 buses.
- Revenue grew 30% to $62 million.
- Gross margin was 4.3% versus 4%.
- Generally accepted accounting principles (GAAP) net income was $36 million versus a $46.8 million loss.
To be sure, Proterra incurred an operating loss of $29.8 million, up 32% year over year as the company's operating and research and development expenses increased. But with a one-time gain related to changes in warrant liabilities, Proterra ended the third quarter with a surprise profit.
Image source: Proterra.
After such a strong quarter, investors may have expected Proterra to upgrade its outlook, but that's not the case -- the company still expects to generate $246 million in revenue as supply chain headwinds are hurting deliveries. So, for example, Proterra says it may not be able to deliver five to 10 buses this year, which is why it reiterated its revenue guidance.
I don't see any reason to worry here as supply constraints are a near-term headwind and Proterra's delivery rate and revenue confirm growth. The company also has a strong backlog, thanks to recent orders including 42 buses from Miami-Dade Transit and 26 buses from Austin Capital Metro.
Proterra is also ramping up battery production, and it just announced an order from Lightning eMotors to supply battery systems for 10,000 electric commercial vehicles between 2022 and 2025.
Now what
Proterra is bullish about 2022, and perhaps the biggest reason why the stock shot up today is the company's prospects now that a $1.2 trillion infrastructure bill is about to be signed into law. As the bill includes $7.5 million spending on zero- and- low-emission buses, Proterra believes its heavy-duty battery technology and expertise in electric transit buses should see greater demand under the Biden administration. Because the company has no debt and $727 million in cash and securities as of the end of the third quarter, investors see a lot of promise in Proterra stock.
