Tesla poised to join S&P 500 after fourth-straight quarterly profit
Tesla delivered its fourth consecutive quarterly profit on Wednesday, scaling a long-elusive hurdle that finally makes it eligible to join the benchmark S&P 500 index.
The electric automaker — whose CEO Elon Musk has been battling with the state of California to keep the company’s factory open despite the coronavirus pandemic — delivered a profit of $2.18 per share, demolishing analyst forecasts for a 14-cent loss.
The surprise profit sent Tesla shares spiking more than 6 percent in extended trading.
Musk also announced Wednesday that Tesla would be building a $1 billion Cybertruck factory in Travis County, Tex. The Factory for Tesla’s first pickup truck will create 5,000 jobs.
“It’s going to be right near Austin, five minutes from Austin INternational Airport and 15 minutes from downtown Austin,” Musk said on Tesla’s earnings call.
Tesla investors were looking for profit as the main metric for the stock’s inclusion in the S&P 500, which requires a full year of profitability as measured by generally accepted accounting principles. Now, a slew of big investment funds that duplicate the S&P 500’s holdings will be forced to buy an estimated $40 billion worth of Tesla shares to avoid errors tracking the index’s performance.
The profit came despite forced shutdowns of Tesla’s Fremont, Calif. factory this spring that kneecapped the automaker’s production capacity. Musk branded the state-ordered closures “fascist” as he went head-to-head with California health authorities to get Tesla’s plant back open.
Musk is now taking a victory lap less than two years after his controversial tweet about taking Tesla private at $420 a share — a pot joke that scored him a $20 million fine and had him booted as chairman of Tesla’s board.
Since the pandemic hit the US in early March, Tesla’s stock is up more than 330 percent. The company’s market cap sits at $295 billion, making it the most valuable car company in the world, more than $85 billion ahead of No. 2 Toyota.
The stock rally has catapulted Musk into the top-10 list of the world’s richest people, with his $72 billion fortune currently placing him at No. 8, according to Forbes. He has added $16 billion to his net worth since the beginning of July.
It has also lined Musk up for a more than $4 billion payday. When Tesla’s six-month market-cap average hits $150 billion, Musk will trigger the second tranche in his eye-popping $50 billion pay package and allow him to buy 1.69 million shares of Tesla at $350 a pop.
Those shares, combined with the first stock award which vested in May when Tesla’s six-month average hit $100 billion, can be flipped for a total profit of more than $4.2 billion at Tesla’s Wednesday closing price of $1,592.
Tesla also reported revenue of $6 billion for the quarter, beating the Street’s forecast of $5.4 billion.
Shares of Tesla were trading up 4.9 percent in extended trading Wednesday, at $1,670.68.
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