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Opinion
Liam Denning

Tesla's Surprise Looks Strangely Familiar

Elon Musk's company beat expectations, but the numbers echo prior quarters.

The Tesla Inc. logo is seen on the grille of a Model X electric vehicle.

The Tesla Inc. logo is seen on the grille of a Model X electric vehicle.

Photographer: Andrey Rudakov/Bloomberg

Tesla Inc.’s third quarters have become a wildcard for the stock’s many bulls and (especially) bears. Wednesday evening’s surprise profit sent the stock soaring, in a virtual replay of what happened this time last year. The big question is whether history will keep repeating or if Tesla can finally achieve the sustained profits and self-funding it has claimed to be on the cusp of for a while.

This matters for two reasons. First, investors added more than $9 billion to Tesla’s value on the back of a net profit of $143 million and free cash flow of $371 million. Second, revenue was actually down on both a sequential and year-over-year basis. When all of Tesla’s value is essentially in its multiple — that is, the promise of stratospheric growth — and growth has gone negative, then it’s fair to say the pivot to earnings had best be (a) ongoing and (b) better than a hundred million or so a quarter.