Tesla, (Nasdaq: TSLA) along with Zoom Video (Nasdaq: ZM), Nvidia (Nasdaq: NVDA), and Shopify (Nasdaq: SHOP) are the leading stocks of this bull market in terms of delivering innovative products and growth rates. In addition to stock performance.
There have always been concerns about these stocks in terms of valuation and the company's ability to deliver on this growth. However, buyers of these companies have been rewarded as they keep delivering on growth expectations and able to generate increased profits.
We are seeing this with Tesla which beat estimates on its most important metrics like earnings, revenue, and vehicle deliveries. As a result, its stock was 5% higher after hours.
Inside the Numbers
In the third quarter, Tesla had EPS of $0.76 which was higher than expectations of $0.57. Revenue also beat at $8.77 billion vs expectations of $8.36 billion. It also set a new record for vehicle deliveries with 139,300 in the quarter. Over the past year, increasing production was Tesla's biggest hurdle, and it seems to have successfully figured it out.
91% of Tesla's revenue came from automobile sales. Gross margins also increased from 18.7% to 23.7% which is expected to climb higher as production increases. The company also earned $397 million in regulatory credits which means that it would have lost money if not for these credits.
Operating expenses by 33% as Tesla is building new factories in China, Texas, and Germany. These factories are expected to begin limited production next year and full production in 2022. The coronavirus led the company to push back its timeline.
Stock Price Impact
Under the surface, Tesla's results are even more impressive. The company has notoriously been bad with forecasts but this year is on pace to meet its target of 500,000 deliveries despite the pandemic. Additionally, its energy generation and storage unit are becoming a more meaningful part of the business as it generated $579 million in revenue up from $400 million last year.
Additionally, Tesla would likely be a big winner with a Biden administration and Senate Democrat as their energy plan is very generous with subsidies and tax credits in addition to public investments in charging infrastructure for electric cars. Another discussed proposal is a cash for clunkers program targeted at electric cars.
Many of these positive developments are reflected in Tesla's stock price which has tripled in the last three months. However, the stock seems to be setting up for another leg higher. Since, September, it's consolidated between $500 and $325. Over the past month, the stock's range has tightened and is offering an attractive entry point for traders and investors.