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On Wednesday, Tesla posted a big quarterly profit, its first since 2016 and the realization of the CEO's prophecy, Elon Musk, that the automaker would go into the dark in 2018.
The company made $ 312 million. But more importantly, it generated revenues of nearly $ 7 billion, which represents a significant increase in sales, which had evolved very predictably by about $ 200 million per quarter. . The $ 3 billion jump for the third quarter was frankly staggering.
More than the end result, analysts' expectations have been largely outpaced (Wall Street has figured in a quarterly equilibrium or slightly). If you withdraw sales of zero-emission credits (ZEV) – about $ 50 million – Tesla generated about $ 260 million.
To give some idea of its magnitude, Ford also announced Wednesday earnings for the third quarter, making a profit of nearly $ 2 billion on a non-GAAP basis, for a turnover of nearly 38 percent. billions of dollars. Ford lost nearly $ 200 million on its new mobility unit (it is in its early stages of growth). Thus, on a single division, Ford loses something in the image of Tesla's product on all of its activities.
Do not go away with the bad impression. But do not dwell on the profitability of Tesla either. With only $ 3 billion in cash and $ 10 billion in debt, as well as significant maturities in 2019, Tesla needs more cash than profits.
Profits come and go, but incomes are eternal
At a teleconference after the announcement of the results, Musk said the benefits might not be as impressive in the future. For example, Tesla is facing repayment of its convertible debt in the first quarter of 2019, which represents more than $ 900 million. The company must also invest billions of dollars in gestational investment, since the construction of a new factory in China until the launch of a crossover SUV.
The good news is that with the increase in revenue, Tesla should be able to manage the expected profits in a more consistent way, thus maintaining share price and a fund-raising channel in shares (despite Musk's statements that the company would not need to sell more shares).
The best news is that an ocean of money coming to the door will help Tesla out of its current constraints. The automotive sector is extremely expensive. Tens of billions are really nothing for a big automaker. It's simply what it costs to keep the lights on and the show going on.
It was actually pretty easy to see soaring revenues coming. Throughout its history, Tesla was a company that built less than 50,000 vehicles a year. Last year, it reached 100,000, and between 200,000 and 300,000 are now at hand. If the demand does not collapse, 500,000 people should arrive within a year or two.
Tesla should have a positive net margin on this volume of production (who knows if it will be 1% or 20%?), But more importantly, the amount of funds distributed by the company should be significantly higher than ever before – mostly because that future products will all have a high price, at least to start.
Tesla is a micro-monopoly
The only potentially tricky question raised by this evolution is that Tesla clearly acts as a micro-monopoly. The electric vehicle market is tiny – it accounts for only about 1% of global sales – and Tesla is the most important one. The company uses its pricing power to satisfy its capital needs and, in the absence of significant competition, consumers can not do anything about it. (In addition, Tesla buyers so far seem to be only price insensitive – Whatever you say, Elon! Where do I sign?
That may be acceptable in the short term – Tesla needs a monopoly to stay alive and, formally, it has not been able to use that power to generate consistent profits – but at least In the long run, he can not be allowed to control Tesla. gigantic band of a market that could experience strong growth in the coming years. The auto industry is the most competitive on the planet and in the United States, consumers have benefited immensely from a wide range of choices.
(For what it's worth, Musk does not want to be a monopoly – he understands that Tesla alone can not replace the 1 billion gas vehicles on the planet with electric vehicles.)
So, although Tesla certainly does not seem to burn anymore, in the future it can not be Tesla or anything. But for now, Musk & Co. has more than the right to relax on a mountain of cash and investigate their good work.
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