Tesla 3Q Profit Blows Past Estimates; Street Says Hold

Shares of Tesla jumped 3.2% in Wednesday’s extended market trading after the electric car maker crushed 3Q expectations for both earnings and revenues. The company’s 3Q EPS surged 105% to $0.76 year–on-year, marking the fifth consecutive quarter of profits. Analysts had forecast EPS of $0.56 for the quarter.

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Tesla’s (TSLA) 3Q revenues jumped 39% to $8.8 billion, exceeding the Street consensus of $8.3 billion. The company said quarterly revenues reflect “substantial growth in vehicle deliveries as well as growth in other parts of the business.” Tesla delivered 139,300 vehicles during the quarter.

Tesla’s CEO Elon Musk said that “Q3 was our best quarter in history.” He added “We continue to grow as fast as we can while focusing on cost control and quality.”

The company reaffirmed its goal of delivering 500,000 cars in 2020 and said “Achieving this target depends primarily on quarter over quarter increases in Model Y and Shanghai production, as well as further improvements in logistics and delivery efficiency at higher volume levels.” (See TSLA stock analysis on TipRanks).

Following the 3Q results, Wedbush analyst Daniel Ives maintained his Hold rating on the stock with a price target of $500 (18.3% upside potential). The 5-star analyst said that the adjusted EBITDA margin expansion of 340 basis points in 3Q “speaks to a business model that continues to have significantly lower costs and more production efficiency even in the face of challenging circumstances globally given COVID-19.” Ives also said “This sustained level of profitability is key for the bulls,” despite the uncertain COVID-19.

With shares up 405% year-to-date, the rest of the Street remains sidelined on the stock. The Hold analyst consensus is based on 13 Holds, 7 Buys and 10 Sells. That’s with an average price target of $333.65 implying 21.1% downside potential is lying ahead.