We could be looking at a brave new Tesla — but a Tesla that has to embrace spending discipline in ways it hasn't before.Tesla vaporized Wall Street expectations on Wednesday when the company swung to a quarterly profit. Tesla has posted third-quarter profits before, but this time around, the mechanism behind the margin was somewhat different.
The obvious answer is that Tesla's revenue is sliding. For Q3, it landed much closer to $6 billion than the 2018 quarter's $7 billion. Simple math takes over here: less money coming in demands less money going out, to yield a positive bottom line. For the quarter, that equation spit out a thin surplus of $143 million. Tesla used the oldest trick in the business book: it cut its way to profitability.
The next question is whether that's preferable to Tesla's financial model of the past decade and a half, which is basically to take capital and incinerate it, promising only wild stock-trading volatility in return.Personally, I'd take the boring, essentially nonmargin business at this point. I'd rather have a more exciting, fat-margin luxury electric-vehicle business, but CEO Elon Musk appears to want to kill that offHowever, I'm not going to argue with discipline.
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