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The most controversial stock on Wall Street reported first-quarter earnings on Wednesday, and boy was it a doozy. Tesla (NASDAQ: TSLA) stock initially rallied more than 10% following the report.
I’ve long been a Tesla skeptic. But I’d be the first to admit this quarter was the most impressive I’ve ever seen from the company. Tesla’s business clearly seems to be on the right track.
For the first time ever, Tesla has demonstrated a business model that can be viable in the long-term. Of course, Tesla’s business is completely different from TSLA stock as an investment. As impressed as I was with Tesla’s quarter, it’s still an unwise gamble to buy the stock at its current valuation.
When it comes to Tesla, many bull and bear arguments are so out there that I have to remind myself to focus on the actual numbers. Tesla reported adjusted EPS of $1.24, handily beating consensus analyst estimates of a 36-cent loss. Revenue of $5.99 billion also topped analyst estimates of $5.9 billion.
In the same quarter a year ago, Tesla reported a $2.90 per-share loss and $4.54 billion in revenue. Revenue was up 32% from a year ago. Previously reported vehicle deliveries for the quarter were 88,400, up 40.3% from a year ago.
Auto gross margins in the quarter were 25.5%, up 3% from last quarter and up 5.3% from a year ago.
Of course, the numbers weren’t perfect. Tesla reported negative free cash flow of $895 million in the quarter, suggesting it is back to spending much more money than it is bringing in.
In a nutshell, Tesla reported impressive revenue growth and even more impressive automotive margins. As a result, it reported its third consecutive profitable quarter for the first time in the Model 3 era. In my opinion, this is as close to a home run as Tesla is going to hit at this stage of its business.
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