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What happened
Electric car company shares You're here (NASDAQ: TSLA) continued their climb Friday. The stock is up 7.9% from 13:22. EDT. This gain adds to a sharp rise in Tesla 's stock price on Thursday, bringing the total gain in equities since Wednesday' s market close to more than 16%.
Friday's gain probably reflects more optimistic investors, who reflected on the company's surprise earnings for its third quarter, which was announced after the market closed on Wednesday. Also, likely contributing to the rise in shares on Friday, Tesla has released an update on initiatives recently put in place to improve the safety of his workplace.
Model 3. Image Source: Tesla.
So what
For the third quarter, Tesla posted non-GAAP earnings per share, well ahead of analysts' estimates. But it is GAAP's profitability and free cash flow that really took investors by surprise. Tesla 's GAAP net income was $ 312 million, up from a $ 619 million GAAP loss in the prior year quarter. This translates into earnings per share of $ 1.75, up from a loss of $ 3.70 per share in the prior year quarter. Free cash flow for the third quarter was $ 881 million.
Profitability was mainly achieved through better economies of scale due to the surge in Model 3 shipments.
The update of Tesla by its chief in charge of the environment, health and safety, Laurie Shelby, is another reason for investors' optimism on Friday. Shelby detailed a number of initiatives that she has been able to implement since arriving at Tesla a year ago. These include the launch of a new and improved on-site health clinic, a program to proactively deploy sports coaches on factory lines and help employees improve ergonomic safety, a rewarding program. employees for identifying security risks, etc.
Now what
In terms of its recent strong quarter, the automaker's expectations are high. Tesla will now have to show investors that it can remain profitable on a sustainable basis. Without sustained profits, the builder will need to raise debt or equity capital to finance its ongoing expansion.
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