Here’s Why Shares of Tesla Are Popping Today

October 27, 2016, 3:06 PM UTC
Telsa CEO Elon Musk Unveils New Vehicle
HAWTHORNE CA - OCTOBER 09: Elon Musk, CEO of Tesla, unveils the dual engine chassis of the new Tesla 'D' model at the Hawthorne Airport October 09, 2014 in Hawthorne, California. The 'D' is the faster and all-wheel-drive version of the Model S electric sedan, capable of accelerating to 60 miles per hour in just over 3 seconds. (Photo by Kevork Djansezian/Getty Images)
Photograph by Kevork Djansezian—Getty Images

Shares of Tesla Motors (TSLA) spiked nearly 5% Thursday after the electric car company wowed investors with its first profitable quarter since 2013.

The news also sent shares of Tesla’s sister company and acquisition target, SolarCity (SCTY), up by 7% to around $21. SolarCity is expected to unveil its much-talked about roof product Friday.

Tesla posted third-quarter revenue of $2.3 billion on earnings per share of 71 cents. Analysts had expected revenue of $1.9 billion on a 54 cent loss. The automaker also posted $176 million of positive free cash flow.

Tesla revealed that it had shipped 24,821 vehicles in the third quarter, beating analyst estimates and leaving it on track to hit its target of 50,000 in the second half of 2016. The company has been mired in production woes over the past few quarters and has routinely missed its ambitious targets.


Tesla’s performance in the third quarter has been considered crucial, as Elon Musk tries to convince Wall Street that his company is more than a cash-guzzling machine. Showing investors that Tesla has a sound business plan will help Tesla, which is in the midst of a cash crunch, raise the funding it needs to hit aggressive production targets (which includes building a massive battery factory in Nevada) and acquire SolarCity.

Tesla announced its controversial $2.6 billion deal to buy SolarCity in August, with a single SolarCity share being exchanged for 0.11 shares of Tesla. That values each SolarCity share at about $23.30 at the market’s open on Thursday, nearly 11% above SolarCity’s actual trading price.

Shareholders are expected to vote on the acquisition Nov. 18.

Read More

CryptocurrencyInvestingBanksReal Estate