Tesla posted its first annual profit, easily topping Wall Street’s forecasts in the final three months of 2019.
Tesla has had only a handful of quarterly profits in its 10 years as a public company. On a strict accounting basis the company posted yet another loss for 2019. However, Tesla posted a $386 million profit in the final three months of 2019 using the operating basis followed by most analysts and investors. That left it with a narrow $35.8 million profit for the year.
“2019 was a turning point for Tesla,” the company said in its statement.
The company said it should be able to continue to grow, with the opening of its Shanghai factory ahead of schedule and a new, lower priced SUV, the Model Y, on which the company recently started production. It expects the first limited deliveries of the Model Y later in this quarter.
It also plans to open a new factory near Berlin in 2021. It said it should “comfortably exceed” 500,000 cars sold this year, a 36% increase from its 2019 sales total.
The results are a validation for Tesla’s controversial CEO Elon Musk, who has fans and detractors on Wall Street as he bucked the traditional auto industry. The company has often fallen short of its promises, but it has not entered a period in which results are regularly exceeding expectations.
Tesla said that even on a strict accounting basis it expects to be profitable going forward. In the past it was known for burning through cash, raising fears of a cash crunch. Now it said it expects to be cash flow positive going forward except for brief periods tied to the launch and ramp-up of new vehicles.
“We continue to believe our business has grown to the point of being self-funding,” said the company in its earnings release. “Continuous volume growth, capacity expansion and cash generation remain the main focus.
Shares of Tesla (TSLA), which have been on a torrid run for the last eight months, jumped about 11.5% in after-hours trading on the report, on top of an earlier 2.5% gain at the close of regular trading.