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Investor's Corner

Tesla releases Q4 FY 2020 $TSLA results: Record deliveries herald path to record profits

(Credit: Tesla)

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Tesla’s (NASDAQ:TSLA) fourth-quarter and full-year earnings for 2020 saw the electric car maker post $10.7 billion in revenue. The results, which were discussed in an Update Letter, were released after the closing bell on Wednesday, January 27, 2021.

Tesla’s fourth-quarter was impressive, with the electric car maker producing a total of 179,757 vehicles comprised of 16,097 Model S and Model X and 163,660 Model 3 and Model Y. The company also delivered 180,570 vehicles comprised of 161,650 Model 3 and Model Y, as well as 18,920 Model S and Model X.

For the full year of 2020, Tesla produced a total of 509,737 vehicles comprised of 454,932 Model 3 and Model Y, and 54,805 Model S and Model X. The electric car maker also delivered a total of 499,550 vehicles, comprised of 442,511 Model 3 and Model Y, and 57,039 Model S and Model X.

The following are the key points in Tesla’s Q4 FY 2020 Update Letter.

REVENUE

Tesla reported a revenue of $10.7 billion for the fourth quarter. In comparison, Wall Street expected Tesla’s Q4 2020 revenue to be at $10.3 billion, while Estimize was more optimistic at $10.657 billion. As per the EV maker, total revenue grew 46% year-over-year in the fourth quarter. Vehicle average selling price (ASP) also declined 11% YoY as the product mix shifted from the Model S and Model X to the Model 3 and Model Y. 

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EARNINGS PER SHARE

Tesla shareholders saw non-GAAP earnings per share of $0.80 in the fourth quarter. In comparison, Wall Street consensus expected Tesla to report a gain of $1.04 per share. Estimize’s numbers were a bit more optimistic at $1.08 per share. 

CASH

Tesla’s operating cash flow less CAPEX stands at $2.8 billion in 2020. The company’s war chest was also bolstered to $19.4 billion in the fourth quarter. Free cash flow in Q4 also stands at $1.9 billion.

PROFITABILITY

For the full year 2020, Tesla posted a $721 million GAAP net income, $2.5 billion non-GAAP net income. GAAP net income for the fourth quarter stands at $270 million, while non-GAAP net income for Q4 2020 stands at $903 million.

TESLA MODEL S and MODEL X REFRESH

Tesla has also officially announced the details for the Model S and Model X refresh, which featured a completely revamped interior that includes a massive 17″ touchscreen, the same size as the one found on the Cybertruck prototype, a new yoke steering wheel, and an 8″ display for the rear passengers.

Following is Tesla’s Q4 FY 2020 Update Letter.

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TSLA-Q4-2020-Update by Simon Alvarez on Scribd

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Tesla analyst says this common earnings narrative is losing importance

“Numbers are going down next year, but that’s ok because it’s all about autonomy.”

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(Credit: Tesla)

A Tesla (NASDAQ: TSLA) analyst is doubling down on the idea that one common earnings narrative is losing importance as the company continues to work toward new technologies and projects.

This week, Tesla will report earnings for the third quarter, and one thing people always pay attention to is deliveries. Although Tesla reveals its deliveries for the quarter well before it reports earnings, many investors will look for commentary regarding the company’s strategy for responding to the loss of the $7,500 tax credit.

Tesla has made a few moves already, including a lease deal that takes a substantial amount of money off, launching new Standard models, and cutting up to 23 percent off of lease pricing.

Tesla makes crazy move to spur short-term demand in the U.S.

However, analysts are looking at the company in a different light.

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Aligning with the narrative that Tesla is not just a car company and has many different projects, Gene Munster of Deepwater Asset Management believes many investors need to look at another part of the business.

Munster said the delivery figures for Q3, which landed at 497,099, the highest in company history, were padded by customers rushing to showrooms to take advantage of the expiring tax credit.

He believes that deliveries will be more realistic in subsequent quarters, but investors should not worry because the focus on Tesla is not going to be on how many cars it hands over to customers:

“Numbers are going down next year, but that’s ok because it’s all about autonomy.”

Tesla has been working nonstop to roll out a dedicated Robotaxi platform in various cities across the United States, and has already launched in two states: Texas and California.

It has also received regulatory approvals to test driverless Robotaxis in Arizona and Nevada, while seeking permissions in Florida and other states, according to the company’s online job postings.

Munster continued:

“Most people are hyper-focused on the Robotaxi opportunity and not focused as much on FSD.”

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While Robotaxi is incredibly important, Tesla’s Full Self-Driving (Supervised) suite is also extremely crucial moving forward, as it sets the stage for the company to roll out a formidable self-driving service.

Tesla rolled out its newest FSD software to more owners last night, and as it expands, the company is gaining valuable data to refine its performance.

Earnings will be reported tomorrow at market close.

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Elon Musk

Tesla CEO Elon Musk’s $1 trillion pay package hits first adversity from proxy firm

ISS said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

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Tesla CEO Elon Musk’s $1 trillion pay package, which was proposed by the company last month, has hit its first bit of adversity from proxy advisory firm Institutional Shareholder Services (ISS).

Musk has called the firm “ISIS,” a play on its name relating it to the terrorist organization, in the past.

The pay package aims to lock in Musk to the CEO role at Tesla for the next decade, as it will only be paid in full if he is able to unlock each tranche based on company growth, which will reward shareholders.

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However, the sum is incredibly large and would give Musk the ability to become the first trillionaire in history, based on his holdings. This is precisely why ISS is advising shareholders to vote against the pay plan.

The group said that Musk’s pay package will lock him in, which is the goal of the Board, and it is especially important to do this because of his “track record and vision.”

However, it also said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

The release from ISS called the size of Musk’s pay package “astronomical” and said its design could continue to pay the CEO massive amounts of money for even partially achieving the goals. This could end up in potential dilution for existing investors.

If Musk were to reach all of the tranches, Tesla’s market cap could reach up to $8.5 trillion, which would make it the most valuable company in the world.

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Tesla has made its own attempts to woo shareholders into voting for the pay package, which it feels is crucial not only for retaining Musk but also for continuing to create value for shareholders.

Tesla launched an ad for Elon Musk’s pay package on Paramount+

Musk has also said he would like to have more ownership control of Tesla, so he would not have as much of an issue with who he calls “activist shareholders.”

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Investor's Corner

Barclays lifts Tesla price target ahead of Q3 earnings amid AI momentum

Analyst Dan Levy adjusted his price target for TSLA stock from $275 to $350, while maintaining an “Equal Weight” rating for the EV maker.

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Credit: Tesla China

Barclays has raised its price target for Tesla stock (NASDAQ: TSLA), with the firm’s analysts stating that the electric vehicle maker is approaching its Q3 earnings with two contrasting “stories.” 

Analyst Dan Levy adjusted his price target for TSLA stock from $275 to $350, while maintaining an “Equal Weight” rating for the EV maker.

Tesla’s AI and autonomy narrative

Levy told investors that Tesla’s “accelerating autonomous and AI narrative,” amplified by CEO Elon Musk’s proposed compensation package, is energizing market sentiment. The analyst stated that expectations for a Q3 earnings-per-share beat are supported by improved vehicle delivery volumes and stronger-than-expected gross margins, as noted in a TipRanks report.

Tesla has been increasingly positioning itself as an AI-driven company, with Elon Musk frequently emphasizing the long-term potential of its Full Self-Driving (FSD) software and products like Optimus, both of which are heavily driven by AI. The company’s AI focus has also drawn the support of key companies like Nvidia, one of the world’s largest companies today.

Still cautious on TSLA

Despite bullish AI sentiments, Barclays maintained its caution on Tesla’s underlying business metrics. Levy described the firm’s stance as “leaning neutral to slightly negative” heading into the Q3 earnings call, citing concerns about near-term fundamentals of the electric vehicle maker.

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Barclays is not the only firm that has expressed its concerns about TSLA stock recently. As per previous reports, BNP Paribas Exane also shared an “Underperform” rating on the company due to its two biggest products, the Robotaxi and Optimus, still generating “zero sales today, yet inform ~75% of our ~$1.02 trillion price target.” BNP Paribas, however, also estimated that Tesla will have an estimated 525,000 active Robotaxis by 2030, 17 million cumulative Optimus robot deliveries by 2040, and more than 11 million FSD subscriptions by 2030.

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