Amid feverish leaks, trial balloons and media reports that Tesla will finally report a profit as production of the Model 3 electric sedan finally took off, following efforts to minimize spending and maximize revenue, coupled with an ongoing mass exodus of senior executives, and Elon Musk’s promise (first made in May) to be cash flow positive, not to mention yesterday’s surprising reversal by noted short-seller Citron who turned tactically bullish on the stock prompting a massive short squeeze, and of course Musk’s well-known problems with keeping his mouth shut on Twitter and his recent settlement with the SEC over Tesla’s “funding secured” going private transaction, it is safe to say that Tesla’s earnings were the most hotly expected numbers of the week, if not the quarter.

So, with all that in mind, moments ago Tesla reported what Bloomberg dubbed a “historic” quarter because not only did revenue and earnings soar, smashing expectations, but the company reported an unprecedented $881 million and positive Free Cash Flow, over a $600 million more than the $280 million expected.

  • Revenue: $6.824BN, smashing consensus expectations of $6.3 billion
  • Net income: $311.5MM, also beating consensus expectations of a -$49.6MM loss
  • Adj. EPS: $2.90, a huge beat to consensus of a $15 cent loss
  • Free cash flow: $881 million, slamming consensus expectations of $280 million

    • Here are the production highlights from the report:

  • At long last, Tesla reported positive free cash flow of $881 million, smashing expectations of a $280 million cash burn. In fact this was the most cash Tesla has made in one quarter in history.
  • Model 3 GAAP and non-GAAP gross margin > 20% in Q3
  • Tesla reaffirmed expectations of continued positive GAAP Net and FCF in 4Q
  • Tesla managed to get the all-wheel-drive Model 3 into production, which Musk said the company did without disrupting the assembly line.
  • Even though the average for the quarter was 4,300 Model 3’s a week, the company got to 5,300 in the last week of the quarter.
  • Production “hell” is over: as Bloomberg notes, labor hours on the Model 3 fell 30% from Q2 with Tesla noting that the Model 3 production system has “stabilized” in Q3.
  • $3.0 billion in cash and cash equivalents, up $731 million in Q3
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