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Elon Musk’s Tesla Expected to Record First Full Year of Profitability

So far, so good Elon.
(Christopher Lyzcen)
(Christopher Lyzcen)
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“Tesla Inc. is expected to report its first full-year profit, a milestone powered by record vehicle deliveries in the face of a global pandemic and a growing appetite for electric cars,” WSJ writes.

Numbers To Consider:

  1. Tesla delivered roughly half-a-million vehicles last year. It was around a 33% rise from the year prior, while worldwide auto sales fell around 14%, according to LMC Automotive.
  2. Wall Street expectations put Tesla’s projected profit at approximately $1.3 billion in 2020 annual profit.
  3. Sales are projected to be $31.1 billion, according to FactSet. In 2019, Tesla lost $862 million on sales of $24.6 billion.

Why It Matters: Tesla came out on top through the pandemic, thanks to its overseas operations and CEO Elon Musk’s ability to manage the crisis. Meanwhile, Tesla stock soared more than 700% last year and the automaker joined the S&P 500 index. The company’s success has been a bright spot while other outfits have been ravaged by the lockdowns and it remains a key component of the ongoing transition to electric vehicles.

  • Tesla has benefited strongly from the growing EV demand in China and expanded production capacity at its Shanghai facility.

A Look At This Quarter: Wall Street says Tesla will post a Q4 profit of around $746 million, an improvement of $105 million from the year before. Sales are expected to be approximately $10.5 billion, which FactSet says is a 40% jump.

  • Overall, the company has been boosted by selling regulatory credits needed to comply with emissions regulations. It pulled in $1.2 billion through the first three quarters of last year after only generating $594 million in all of 2019.

The Outlook: Tesla has big plans, some of which tend to come up short — Musk did say he wanted to launch a robot taxi service by the end of 2020. He’ll aim to march toward delivering a million cars with an 840,000-vehicle expectation this year. Musk, of late, has “shored up its cash position recently by selling billions in new stock,” which he has said would be used to pay down debt and amass a “war chest.”

Justin Oh:

Tesla ($TSLA) is largely flat today, an accomplishment on a large down day for growth stocks. At $888 per share, $TSLA is trading at a $840 billion valuation, which is 18x Sales, 81x Gross Profit, and 94x EBITDA on 2021 analyst estimates.

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