Continuing a run of good fortune, Tesla posts second quarterly profit

Tesla Q4 earnings

Riding a record number of deliveries, Tesla (NASDAQ: TSLA) beat analysts’ expectations, reporting revenues of $7.4 billion for the fourth quarter of 2019, up from $6.3 billion the previous quarter.

The electric vehicle company said Wednesday it made a net profit of $105 million from October through December, or $2.14 adjusted earnings per share (EPS).

Analysts had pegged EPS at $1.72 and revenues of $7.02 billion, according to an overview of analyst estimates compiled by Refinitiv, a financial data provider.

Tesla has been on a tear the past few months, starting with a surprise profit during the third quarter of 2019. The news sent Tesla’s stock price soaring, above the $420 per-share level CEO Elon Musk once held up as a benchmark in a previous, discontinued plan to take the company public.

The Palo Alto, California-based company’s market capitalization registers around $100 billion, more than that of General Motors and Ford combined.

Its epic rise has fueled murmurings of a bubble. But the company’s latest earnings release continues the upbeat accounting.

Tesla delivered a record 112,095 vehicles in Q4 and 367,500 vehicles for all of 2019. That’s up 50% from 2018 deliveries and in line with its guidance range of 360,000 to 400,000 vehicles.

Nearly all of the people who purchased Teslas were new buyers who did not hold reservations, according to a letter to investors posted on Wednesday.

Despite the increase in deliveries, the company did not earn a profit for the full year 2019.  Revenue growth last year — only 1% compared to Q4 2018 — was offset in part by more leases, the company said, noting that the Model 3 has become a larger part of the lease mix.

But in 2020, vehicle deliveries should “comfortably exceed” 500,000 units, Tesla said, adding that due to the ramp-up of production of the Model 3 in Shanghai and Model Y in Fremont, California, production will likely outpace deliveries this year. Steady profitability is also part of the 2020 outlook.

Tesla reported free cash flow of $1 billion. The company’s cash and cash equivalents balance increased $930 million to $6.3 billion in the fourth quarter.

The letter made brief mention of the company’s commercial vehicle, the Tesla Semi, noting that limited production was expected this year. The heavy-duty electric truck was unveiled a couple of years ago, but the company has pushed back delivery dates more than once.

Tesla executives will discuss results during an earnings call later Wednesday.

This is a developing story.