Tesla (TSLA) missed Q4 earnings estimates late Wednesday, but sees 2021 delivery growth accelerating from 2020’s pace and confirmed new Model S and X versions are coming. Tesla stock fell.
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The report comes as the maker of electric cars embarks on a pivotal year that will see new factories and models while competitors like Nio (NIO), Xpeng (XPEV) and Li Auto (LI) represent bigger challenges.
Tesla Earnings
Estimates: Analysts expect EPS of 90 cents, more than double the same period a year ago, as revenue climbs 37% to $10.13 billion, according to Zacks Investment Research.
Results: EPS of 80 cents on revenue of $10.74 billion. Revenue from regulatory credits shot up 202% to $401 million. Deliveries surged 61% in Q4 to 180,667, led by a 75% pop from the Model 3.
Average selling price fell 11% as the sale mixed shifted to the cheaper Model 3 and Y vs. the Model S and X. Tesla said the Fremont factory will resume Model S and X production in Q1 after retooling for new versions of both EVs. Changes include a new powertrain and interior as well as exterior improvements, among other things.
Quarter-end cash and cash equivalents increased to $19.4 billion in Q4, driven mainly by Tesla’s recent capital raise of $5 billion and free cash flow of $1.9 billion, partially offset by early debt repayments.
Outlook: Tesla sees 50% average annual growth in vehicle deliveries, with 2021 expected to be faster than that pace. In 2020, deliveries grew 36% to 499,647.
Stock: Shares fell 4.5% late after closing down 2.1% at 864.16 on the stock market today. Tesla stock soared more than 700% in 2020 and has long been extended from a 466 buy point from a cup with handle on Nov. 18, according to MarketSmith chart analysis.
Tesla stock flashed several signals of a climax run on Jan. 8, which occurs when a stock has been rallying for months. But while shares took a breather on Jan. 11, they’ve not only regained those losses but also hit an all-time high of 900.40 intraday on Jan. 25. Tesla is an IBD Leaderboard stock.
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2021 Outlook
Look for Tesla to give additional guidance for 2021 deliveries after hitting 499,550 in 2020, just shy of its goal of 500,000. Meanwhile, Tesla began making deliveries of China-made Model Y SUVs, which could further boost 2021 numbers.
“For Tesla we believe the initial line in the sand for delivery unit guidance is in the 750,000 range with the upside bias given the growth we are using not just in Chains but in Europe and the U.S. with EV demand accelerating globally,” said Wedbush analyst Daniel Ives in a recent note to clients.
Ives adds that while the Chinese market is the “heart and lungs of the Tesla bull thesis,” China-based rivals Nio, Xpeng and Li Auto also stand to benefit from increased demand.
Ives, who has a price target of 950 for Tesla stock, says he believes 40% or more of its sales will come from China by 2022. China represents the main growth region for Tesla sales, followed by Europe and the U.S.
“We believe that the China growth story is worth at least $100 per share in a bull case to Tesla as this EV penetration is set to ramp significantly over the next 12 to 18 months, along with major battery innovations coming out of Giga 3,” he said.
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Other Tesla Updates
Meanwhile, Tesla is building new factories in Germany and Austin, Texas, with plans to start production at both sites later this year. And last month, the Indian Express reported that Tesla will begin operations in India early next year.
On Wednesday, Tesla said it is building up Model Y capacity in Germany and Texas plants and remains on track to start deliveries from both plants this year.
This year will also be key for new models. Tesla is due to start production of its Cybertruck in late 2021, as General Motors (GM) and Lordstown Motors (RIDE) ready competing electric trucks. Tesla’s Semi class 8 big-rig truck is also due to begin production this year and be available in late 2021.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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