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Summary of Tesla Q3 2020 Results, Crushing Wall Street Expectations

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On Wednesday October 21, Tesla disclosed its financial results for the third quarter of 2020. The automaker revealed an impressive quarter on all fronts: Production, Deliveries, Income, and Profitability. Tesla was able to surpass Wall Street’s expectations by wide margins. 

Q3 Performance: Outlining the Main Results

The detailed results were published in an Update Letter released after market close. Here are the key takeaways:

  • Revenues were reported at $8.771 billion for Q3. Wall Street analysts projected Tesla’s Q3 2020 revenues at $8.28 billion. Total revenues grew by 39% year-over-year during the third quarter. 

  • Profitability levels reached a record $809 million, which has resulted in a 9.2% operating margin. The operating margin is the profit a company makes on a dollar of sales after paying for variable costs of production. These costs do not include interest payments, or taxes. Tesla also ended the quarter with a $331 million GAAP net income. 

  • Cash has steadily grown throughout the quarter. Tesla has $5.9 billion increase in cash and $14.5 billion in cash equivalents. Cash equivalents include bank accounts and marketable securities, such as stocks and bonds. According to the Update Letter, this was due to the company’s decision to raise $5 billion in capital. Last August, Tesla’s Board of Directors announced a 5-for-1 stock split in the company’s shares of common stock. This brought the price of a Tesla share down to one-fifth of its original price. At the time of writing this article, Tesla shares are trading at $429.09 per. 

Q3 Performance: Additional Notes

During the call, Elon Musk offered updates for both Giga Berlin and Giga Texas. Musk stated that both factories should reach full-production capacity between 12 and 18 months, 24 months tops. 

Musk talked about Full-Self Driving beta  that was rolled out last night. Customers subscribed to Tesla’s Early Access Program will receive the software update for now. More vehicle owners will receive the update as the weeks progress, with the goal of a “wide release” by the end of the year. 

Tesla’s Q3 performance is impressive because they surpassed Wall Street’s estimates all while navigating through a pandemic, building two new factories, and vertically integrating production. Legacy automakers were never able to accomplish those feats throughout their existence.  

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