Record quarter for Tesla TSLA 1.57%
Not as fast as it sounds.
Tesla announced Saturday morning that it delivered 180,570 cars worldwide in the fourth quarter, setting a new company record. That brings a total of 500,000 embarrassments by 2020, in line with the company’s latest guidelines. The company also said that it will soon start delivering its China-made Model Y crossover vehicle to customers.
While hitting the guide is definitely good news, it rarely represents a huge operational feat that should have dazzled Wall Street. For starters, meeting operational forecasts is a regular occurrence for most members of the S&P 500, to which Tesla was added last month.
And investors should not forget that chief executive Elon Musk once claimed in 2016 that Tesla would sell one million cars by 2020. Since he made that claim, Tesla shares have risen nearly fifteenfold. Even last year, by the end of 2020, Mr Musk’s 10 million fully autonomous “robotaxis” had taken to the roads without promise.
Turning to the present, the company said it produced as many cars as it could deliver to customers in the fourth quarter. But in October Tesla said it had installed enough production capacity to make 210,000 in the quarter, indicating that the capacity utility rate in the quarter was in fact a fairly pedestrian 86%.
As a result of last year’s Torrid Rally, Tesla’s market value is about 6 70,670 billion. That’s 1. 1.3 million per car sold last year, seven times the combined market value of Ford and General Motors..
Yet Tesla has a minor share in the global auto market, and the competition for electric cars is heating up. To justify the price tag on the stock, Tesla must go through its own predictions, not just with them.
What’s more, the little profit Tesla makes is a huge squeeze to help rivals meet the emission order from the sale of regular credit. While fourth-quarter figures will not be released until Tesla announces full financial results, Tesla has booked પ્રકારના 3 1.3 billion in such sales in the previous four quarters, with a 100% profit margin. More electric competition from legacy auto manufacturers comes online, so there may be fewer buyers for credits, it could end up being a source of profit.
These concerns do not put shareholders in trouble who are sitting on big profits. But recent history warns: Tesla’s market value, in the two episodes since 2018, has been cut in half. If this were to happen, the earnings per share would be 700 times the value behind. Auto toe industry leaders historically are lucky to evaluate earnings 10 times.
Mr Kasturi decided to sell કંપની 10 billion in fresh company stock last year amid an angry rally. For the average investor, following his lead is a good idea.
Write to Charlie Grant at [email protected]
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