Tesla Q4 Earnings Overview – Insights and Key Updates

Wall Street investment website Seeking Alpha has emphasized the ongoing dynamics faced by Tesla Motors, characterized by the clash between bullish supporters and bearish detractors. This observation comes in the wake of Tesla’s fourth-quarter non-GAAP earnings report, which illustrated earnings per share of $2.14, beating market expectations by $0.38. In contrast, the GAAP net earnings per share of $0.58 fell short of Wall Street’s expectation by $0.26.

During the fourth quarter, Tesla reported gross revenues amounting to $7.38 billion, representing a year-over-year increase of 2.1 percent and exceeding expectations by $0.3 billion. This revenue primarily stems from the sales of electric vehicles, parts and accessories, along with earnings from selling EV credits to traditional automakers. However, the company also reported a GAAP net income of $105 million for the quarter, while suffering a net loss of $862 million for the entire fiscal year 2019.

Historically, the first quarter of the year—ranging from January to March—poses challenges for the automotive industry. CEO Elon Musk noted during the earnings call that the company does not anticipate posting a profit after the current quarter. Although Tesla has achieved quarterly profits intermittently over the years, it has only reported annual losses when adhering to GAAP standards.

Market Response and Stock Performance

In anticipation of this positive earnings report, Tesla’s stock closed at $580.99 per share on Wednesday night, reflecting an increase of $14.09, or 2.49 percent for the day. Notably, shortly after the market opened on Thursday, Tesla’s stock surged by $57.83, exceeding 10 percent to reach $638.02 per share. This escalation pushed Tesla’s market cap above that of legacy automotive companies, including GM, Ford, and Fiat Chrysler combined.

Key Takeaways from Tesla’s Q4 Investor Call

• Model Y Production: Tesla commenced limited production of the Model Y at its Fremont, California plant in January. Musk indicated that the Model Y, regarded as the automaker’s future best-seller, carries a 315-mile range rating by the EPA, which he believes is conservative based on real-world performance. Full production is now expected to start this spring.
• Quarterly Deliveries: The company achieved delivery of 112,000 vehicles in the fourth quarter of 2019, matching the total output of previous years.
• Cybertruck Insights: Musk discussed the futuristic Cybertruck, designed without traditional truck preconceptions, stating that demand would match production capabilities and exceeded public expectations.
• Shanghai Efficiency: The COVID-19 crisis in China may delay Model 3 deliveries from the new Shanghai plant by a week or two. However, Musk commended the speedy setup of the facility and its operational efficiency.
• Autopilot Developments: Questions arose regarding Tesla’s insurance offerings, especially related to using Autopilot. Musk confirmed that significant improvements regarding Autopilot software are underway, promising noticeable enhancements in consumer experience.

Looking Ahead

Musk affirmed that constructing vehicles in the regions where they are sold is advantageous, improving efficiency and overall delivery timelines. Additionally, with Tesla’s stock currently peaking, the discussion surrounding raising capital for future products and new factories continues to be a topic of interest among analysts.

Tesla remains aligned with its plan to innovate within the electric vehicle market, reinforcing its industry position amidst growing competition.