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Tesla (TSLA) Q4 Earnings Miss, Delivery Guidance Unclear

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Tesla’s (TSLA - Free Report) shares declined more than 5% in after-hours trading on Jan 27, as the electric vehicle (EV) king lagged earnings expectation this time around, snapping its record of beating the same for five trailing quarters. While the company managed to post profit for the sixth consecutive quarter, investors were left disappointed as they were betting big on an earnings beat. The company’s failure to provide a concrete outlook for 2021 deliveries also seems to have dampened investors’ confidence.

Tesla reported earnings of 80 cents for fourth-quarter 2020, which lagged the Zacks Consensus Estimate of 90 cents per share. Lower-than-expected automotive gross profit resulted in the underperformance. Precisely, automotive gross profit came in at $2,244 million, missing the consensus mark of $2,328 million.

Nonetheless, the bottom line compared favorably with the year-ago earnings of 43 cents a share. Importantly, the firm posted its first annual net profit in 2020. Total revenues came in at $10,744 million, surpassing the consensus mark of $10,129 million. The top line also witnessed year-over-year growth of 45.5%.

Tesla, Inc. Price, Consensus and EPS Surprise

Tesla, Inc. Price, Consensus and EPS Surprise

Tesla, Inc. price-consensus-eps-surprise-chart | Tesla, Inc. Quote

Key Takeaways

Delivery and production numbers totaled 180,667 and 179,757 vehicles, reflecting a year-over-year increase of 61% and 71%, respectively. Tesla reported stellar fourth-quarter 2020 production and deliveries amid sustained recovery of the auto sector, thanks to increasing popularity of green vehicles, preference for personal mobility, easier credit conditions, and hopes of economic recovery buoyed by vaccination optimism as well as fiscal stimulus.

Model 3/Y registered production and deliveries of 163,660 and 161,701 vehicles, implying a year-over-year increase of 88% and 75%, respectively. Meanwhile, Model S/X production and deliveries totaled 16,097 and 18,966 vehicles, down 10% and 3% year over year, respectively.

Total automotive revenues surged 46% year over year to $9,314 million for the reported quarter. This included $401 million from the sale of regulatory credits for electric vehicles, which increased a whopping 202% year over year. Automotive gross margin was 24.1%, improving 157 basis points from fourth-quarter 2019.

Energy generation and storage revenues came in at $752 million for fourth-quarter 2020 compared with $436 million in the year-ago period. Services and other revenues were up 16.9% year over year to $678 million.

Operating expenses totaled $1,491 million during the quarter under review, up from $1,032 million in the corresponding period of 2019.

While the company almost met the vehicle delivery target for 2020, it crushed investors’ hopes by not providing any clear delivery target for 2021. Instead, the company just released a statement saying that it anticipates achieving 50% average annual growth in vehicle deliveries over a multi-year horizon. 

Financials

Tesla — whose peers include General Motors (GM - Free Report) , Ford (F - Free Report) and Toyota (TM - Free Report) — had cash and cash equivalents of $19,384 million as of Dec 31, 2020 compared with $6,268 million on Dec 31, 2019. Net cash provided by operating activities amounted to $3,019 million for fourth-quarter 2020 compared with $1,425 million in the prior-year period. Capital expenditure increased to $1,151 million from the year-ago quarter’s $412 million. Importantly, the Zacks Rank #3 (Hold) firm generated free cash flow of $1,868 million during the quarter. The metric compared favorably with $1,395 million and $1,013 million recorded in the prior quarter and the year-ago period, respectively. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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