Tesla, Inc. (NASDAQ: TSLA) has seen an incredible melt-up over the past several months. Shares are up 288.52% over the past six months, with gains of 112% in 2020 alone.
On Tuesday, February 4, 2020, shares of TSLA jumped 13.73% to $887, after hitting a new intraday all-time high of $968.99 earlier in the trading day.
As shares continue to rally, the market has been bombarded with extreme bullish and bearish estimates.
Billionaire investor, Ron Baron, recently told CNBC that he estimates Tesla “has the potential to hit at least $1 trillion in revenue in 10 years and continue to grow from there,” according to the news outlet. On the other hand, we have begun to see some experts looking to call the top. Citron Research recently indicated that it was looking to short Tesla after a Twitter post noted that the rally was just “computer generated.”
Short sellers have seen losses grow into the billions, as the rally continues unabated. On Monday, February 3, 2020 alone, Tesla short sellers lost a total of $2.5 billion, after TSLA shares jumped 20%.
Tesla Releases Impressive Q4 Earnings Report
Tesla released its Q4 earnings report on January 29, revealing better-than-expected results. Due to the report, the company’s stock jumped by as much as 13% in after-hours trading.
Highlights from the earnings report include:
- $2.14 earnings per share
- $7.38 billion in revenue
- $930M increase in cash and cash equivalents to $6.3B
Regarding its Q4 results, Tesla stated, “2019 was a turning point for Tesla. We demonstrated strong organic demand for Model 3, returned to GAAP profitability in 2H19 and generated $1.1B of free cash flow for the year. We achieved strong cash generation through persistent cost control across the business.”
The company also said that it expects its net income and cash flow to remain positive in the future.
Model Y Updates
Tesla stated in the earnings report that it has started a production ramp for its upcoming Model Y crossover SUV.
During an earnings call with investors, Tesla CFO Zachary Kirkhorn stated, “on Model Y, we expect first deliveries and limited quantities later this quarter and will ramp over subsequent quarters.”
Energy & Solar Updates
Regarding the company’s energy business, Tesla stated in the earnings report that “in Q4, we deployed 54 MW of solar, 26% more than in the prior quarter. Where offered, subscription solar grew significantly in Q4. With a monthly subscription that can generate income from the first month of usage, there is no reason not to have solar panels installed.”
The company also noted that it has ramped up production of its Solarglass Roof and has partnered with several roofing companies to help meet demand for Solarglass Roof installations.
Analyst Ratings Are Mixed
Tesla’s promising Q4 results may begin to sway analysts. However, for the time being, analyst ratings for Tesla remain fairly mixed.
Over the past month, several firms, including Morgan Stanley, Robert W. Baird, ROTH Capital, and others have downgraded Tesla from their previous ratings.
Meanwhile, other firms, such as Oppenheimer, Bank of America Merrill Lynch, and Credit Suisse reiterated their underperform ratings for Tesla in January.
However, this doesn’t necessarily mean analysts think the stock is doomed. Morgan Stanley, for example, downgraded the stock earlier this month but reiterated that it believes Tesla has great long-term potential.
Regarding this rating, Morgan Stanley analysts Adam Jonas and Armintas Sinkevicius stated, “we’re encouraged by Tesla’s execution and think it deserves to be among the world’s most valuable auto companies,” they continued, “However, we think investors will be presented with more attractive opportunities to own the stock in the future.”
Tesla: Future Outlook
In its latest earnings release, Tesla offered its outlook for its next full fiscal year.
In 2020, Tesla expects to deliver over 500,000 units and expects production to outpace deliveries with increased production of the Model 3 in Shanghai and the Model Y in Fremont. This increased production should also help drive sales.
Another important note is that Tesla doesn’t expect to need any more outside capital. The company explained, “we expect positive quarterly free cash flow going forward, with possible temporary exceptions, particularly around the launch and ramp of new products. We continue to believe our business has grown to the point of being self-funding.”
Article By: Connor Beam