Tesla jumps 9% as the company records a £12.83 million profit in the first quarter

Tesla Inc. (NASDAQ: TSLA) released its quarterly earnings report on Wednesday that recorded a £12.83 million profit (GAAP) in the first quarter. The upbeat results sent the stock up 9% in extended trading.

On the other hand, however, Tesla posted £718 million in negative free cash flow in Q1 that threatens the company’s previous target of turning free cash flow positive in 2020.

According to Refinitiv, experts had forecast Tesla to print £4.73 billion in revenue in the first quarter. In terms of earnings per share (EPS), they had anticipated 29 pence per share. But in its financial report on Wednesday, the company topped estimates posting £4.80 billion in revenue and 99 pence of adjusted earnings per share.

The Coronavirus had pushed Tesla into closing its Fremont factory in late March. Earlier this week, the company asked some of its Fremont factory employees to return to work ahead of the schedule.

Tesla suspends its previous financial guidance

The company highlighted the capacity to deliver 500,000 vehicles in 2020 but suspended its previous financial guidance on Wednesday citing the rising Coronavirus uncertainty. Tesla’s dovish statement hinted at a lack of confidence that it will be able to hit its target of full-year profitability in 2020.

Earlier this year in March, the U.S electric car manufacturer reported over 88,400 vehicle deliveries in Q1.

Tesla reported £4.09 billion in automotive revenue in the first quarter with regulatory credits making up roughly 7% of it. The credits served to expand the car maker’s automotive gross margins to 25.5% at the end of Q1.

Tesla’s energy generation and storage business generated £260 million in Q1 revenue. According to CEO Elon Musk, lacklustre performance in this segment was attributed to the COVID-19 restrictions.

The recent quarter marked Tesla’s first after it launched its Model Y SUV and established its factory in Shanghai.

Tesla to slash prices for Model 3 In China

Tesla also accentuated on Wednesday that it plans on slashing prices for a few of its Model 3 variants in China to comply with the new requirements for subsidies set out by Chinese government. In February, the company’s stock offering raised £1.6 billion before the outbreak of the flu-like virus turned into a pandemic.

At £698 per share, Tesla is currently more than 100% up year to date in the stock market. It is roughly 4% down as compared to its record-high in February.

At the time of writing, Tesla is valued at £118.18 billion.