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Why Investors Love Tesla Again

Tesla Motors Inc. (NASDAQ: TSLA) reported third quarter 2015 earnings after markets closed on Tuesday. For the quarter, the electric car maker posted an adjusted diluted loss per share loss of $0.58 on adjusted revenues of $1.24 billion. In the same period a year ago, the company reported adjusted earnings per share (EPS) of $0.02 on revenues of $932.35 million. Third-quarter results compare to the consensus estimates calling for a per share loss of $0.50 and $1.26 billion in revenues.

On a GAAP basis, the carmaker lost $1.78 per basic share. GAAP revenue totaled $955 million. Adjusted revenue includes $307 million in deferred Model S gross profit due to lease accounting.

The carmaker built 13,091 vehicles in the quarter, including a few of the carmaker’s new Model X crossover SUV. Tesla delivered 11,603 vehicles in the quarter, slightly above its estimated deliveries of around 11,500. The company directly leased 494 cars to customers in the first quarter worth $45 million in aggregate value.

Tesla says it plans to build 15,000 to 17,000 vehicles in the fourth quarter which will result in deliveries of 50,000 to 52,000 units for the full year. The full-year target for deliveries was lowered a bit at the end of the second quarter from a previously announced 55,000 units to a new range of 50,000 to 55,000 units. Deliveries are forecast at 17,000 to 19,000 units for the fourth quarter.

Looking ahead to next year, Tesla said it is highly confident of a steady state production and deliveries of 1,600 to 1,800 vehicles per week combined for Model S and Model X. That is unchanged for last quarter’s outlook.

The selling price of the Model S declined in the third quarter and Tesla expects the price to “increase slightly” in the fourth quarter as deliveries increase on Model X units with a high number of options.

Non-GAAP gross margin of 25.1% and 24.1% on a GAAP basis.

All told, Tesla believes that it will have a good fourth quarter and investors are believing the company.

Shares are traded up about 7.6% at $224.24 in Tuesday’s after-hours session. The stock’s 52-week range is $181.40 to $286.65. The consensus price target for the shares was around $289.19 before today’s report with the highest target set at $450.00.

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