Technology

Tesla cracks the $1 billion profit mark

New York (CNN Business)Tesla posted record profits Monday — its third record quarter in a row — as its adjusted earnings reached the $1 billion mark for the first time.

The company recorded $9 billion in total revenue. That was slightly lower than fourth quarter sales but up 75% from the year-earlier period.

Revenue was partly held back as it stopped building its two most expensive models, the Model S and Model X, during the quarter, as it prepared to roll out new versions of those vehicles and dealt with a shortage of computer chips that has dogged the entire auto industry.

    But Tesla said it weathered the chip shortage “in part by pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.” It said its deliveries of the new Model S “should start very shortly.” But that was the same prediction made when it reported fourth-quarter results three months ago.

      The company was also helped by an investment in bitcoin. The company had previously disclosed it invested $1.5 billion in bitcoin in the quarter with some of its cash on hand. It said the sale of bitcoin during the period resulted in a $101 million profit.

          It wasn’t long ago that Tesla was losing money most quarters and in danger of running out of cash. It didn’t report consecutive profitable quarters until the end of 2018, and it proceeded to lose money again over the first half of 2019.

          But it has been profitable since the third quarter of 2019, and the stock has soared since then, climbing 1349% since it reported that third quarter profit in 2019. It is one of the nation’s most valuable companies and its stock is worth more than most other major automakers combined.

          And its adjusted earnings in the first quarter could top that of some established automakers, such as Ford (F), according to analysts’ forecasts, even though Ford sells far more cars.

          Some critics of Tesla have questioned the strength of its earnings, pointing to the fact that its “adjusted” earnings excludes some costs such as stock compensation.

          But many companies report adjusted earnings as well as a stricter version of net income that follow generally accepted accounting principles, or GAAP results. And even under those GAAP rules Tesla reported net income of $438 million, itself a record.

          But the critics again say Tesla is losing money on actually selling cars and solar panels, its other primary business, and that it depends on selling $518 million in regulatory credits that other automakers need in order to comply with environmental rules, as well as the profit it reported on bitcoin trades.

            The revenue and adjusted earnings both topped forecasts of Wall Street analysts surveyed by Refinitiv, although on a GAAP basis its net income fell a bit short of expectations.

            Shares of Tesla (TSLA), which were higher during the trading day in anticipation of the report, were slightly lower in after-hours trading.

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