Shares of electric car manufacturer Tesla Inc. (NASDAQ:TSLA) have surged after the company announced a surprise third quarter profit.
Tesla’s share price rose 18% to $299.88 U.S. in after hours trading Wednesday after the company announced that it earned a profit of $1.86 U.S. a share in the third quarter, beating analysts’ average estimate for a 24-cent loss. It marks the company’s first profit in a year.
Tesla stock was trading at $306 U.S. per share in pre-market activity Thursday morning.
Tesla Chief Executive Officer Elon Musk announced at least three rounds of job cuts since last year and restructured business units to counter slowing sales of its higher-margin car models.
"Operating expenses are at the lowest level since Model 3 production started," Tesla said in a written statement. "As a result, we returned to GAAP profitability in Q3 while generating positive free cash flow. This was possible by removing substantial cost from our business."
The stock rally was a shock reversal given that Tesla’s share price had been down 23% this year through Wednesday’s close. The maker of the Model 3 sedan said that its revenue fell to $6.3 billion U.S. in the third quarter, missing analysts’ estimates and down from $6.8 billion U.S. a year ago. The drop is the first year-over-year decline for the company since 2012, when the Model S sedan was moving into production.
