Skip to main content

Tesla late on Wednesday reported a quarterly profit, citing improvements in operating efficiency and a reduction in manufacturing and material costs.

Mike Blake/Reuters

Tesla Inc. shares soared 17 per cent on Thursday after the electric-car maker surprised Wall Street by delivering on chief executive officer Elon Musk’s promise of a profit in the third quarter, even as doubts remained about its long-term prospects.

Trading at US$299, Tesla’s market capitalization was US$53-billion, surpassing General Motors Co.’s $51-billion stock market value and making it the United States’ most valuable car company. It has been the No. 1 U.S. car company by market cap before, but recently GM has had a substantial lead.

Tesla late on Wednesday reported a quarterly profit, citing improvements in operating efficiency and a reduction in manufacturing and material costs.

Story continues below advertisement

The strong report unleashed a bloodbath on traders shorting Tesla, the second most shorted U.S. company, after Apple Inc., in terms of the overall amount of money shorted.

With US$10.5-billion bet against Tesla, short sellers suffered paper losses of US$1.4-billion on Thursday, erasing 70 per cent of the profits they had logged in 2019, according to S3 Partners, a financial analytics firm. Tesla’s shares remain down 10 per cent year to date.

Tesla’s US$1.8-billion junk bond due in August, 2025, surged 3 points in price after the results, driving its yield to the lowest since March, 2018.

“A strong step forward, yet Tesla will need to put together a string of similar data points to demonstrate the sustainability of results … and its track record has been spotty on this,” Credit Suisse analysts said.

At least eight brokerages raised their price targets on Tesla shares, while the company’s average rating on Wall Street remained “hold”, with just 11 of 34 analysts recommending investors buy the stock.

Investors in the past have shown impatience with the company’s serial failures to meet financial and production targets and shares in the company are still down more than a third from their 2018 peak of almost US$390.

The company has been struggling with margins and a new Chinese factory is expected to be help on that front, but analysts said the jury was still out on whether it can sustain the push into profitability.

Story continues below advertisement

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies