Tesla reports quarterly profit, opening door to S&P 500 as shares rise

(Reuters) – Tesla Inc (TSLA.O) on Wednesday posted a second-quarter profit despite the ongoing global pandemic, sending its stock up 6% in after-hours trading and clearing a hurdle that could lead to the electric carmaker’s inclusion in the S&P 500 index .SPX.

FILE PHOTO: A Tesla SuperCharger station is seen in Los Angeles, California, U.S., July 9, 2020. REUTERS/Lucy Nicholson/File Photo

Tesla said it earned non-adjusted net income of $104 million from April to June, or a $0.50 per share profit, marking the first time the company has posted a profit for four straight quarters, a necessary goal for it to be included in the stock index of the largest U.S. companies.

The result marks a major accomplishment for Chief Executive Elon Musk, whose mission of leading the global auto industry into an electric future has frequently been questioned by investors who doubted the viability of Tesla’s business.

Tesla’s shares have enjoyed a meteoric rise in recent months, gaining more than 500% over the past year. Many analysts believe the share rally has been fueled in part by expectations of Tesla’s imminent inclusion in the stock index, which would unleash a flood of new demand for Tesla’s shares.

The company on Wednesday affirmed its goal to deliver at least half a million vehicles by the end of 2020 despite production interruptions, including the shutting of its California factory for nearly six weeks of the quarter on the orders of local authorities.

“While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target,” the company said.

Tesla’s second-quarter revenue fell to $6.04 billion from $6.35 billion a year earlier, but surpassed analyst expectations for revenue of $5.37 billion, according to IBES data from Refinitiv.

Tesla reported $5.18 billion in second-quarter automotive revenue, but its share of income from regulatory credits – payments the company receives from other carmakers to offset emissions – increased to 8% to $428 million.

The company said higher income from those credits in combination with temporary employee salary cuts during the pandemic and deferred revenue from its yet-to-be-released self-driving feature offset the cost of factory shutdowns.

Musk on Tuesday qualified for a payout worth an unprecedented $2.1 billion, his second jackpot since May from the electric car maker following its massive stock surge.

Tesla is looking to expand vehicle production by building a new factory in the U.S. Southwest as soon as the third quarter, with Texas’ Travis County and Oklahoma’s city of Tulsa vying for the new plant.

The company on Wednesday said a site has been selected and preparations are under way, but did not provide further details. Officials for Tulsa and Travis County did not immediately respond to requests for comment.

Travis County has offered some $65 million in tax rebates to entice the company, which plans to produce its Model Y sports utility vehicles and futuristic Cybertruck at the new factory.

Reporting by Akanksha Rana in Bengaluru and Tina Bellon in New York; Additional reporting by Paul Lienert in Detroit; Editing by Anil D’Silva and Matthew Lewis

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