Skip to main content
  • Register
  • Help
  • Contact us
  • Log out of your HL account

Tesla Inc (TSLA) USD0.001

Sell:$510.16 Buy:$510.47 Change: $2.99 (0.58%)
NASDAQ:0.34%
Market closed |  Prices as at close on 17 January 2020 | Switch to live prices |
Sell:$510.16
Buy:$510.47
Change: $2.99 (0.58%)
Market closed |  Prices as at close on 17 January 2020 | Switch to live prices |
Sell:$510.16
Buy:$510.47
Change: $2.99 (0.58%)
Market closed |  Prices as at close on 17 January 2020 | Switch to live prices |
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

HL comment (3 January 2020)

Tesla delivered record production and deliveries during the fourth quarter - with quarter-on-quarter improvements in both premium Model S and X and the newer Model 3. For 2019 as a whole Tesla delivered around 367,500 vehicles.

The focus remains on expanding production in the US and Shanghai. The group has already produced just under 1,000 cars from the Shanghai factory, and achieved a production rate of over 3,000 units per week, excluding battery pack production.

The shares rose 4.4% following the announcement.

View the latest Tesla share price and how to deal

Our view

Tesla's early push into high performance, high quality electric cars has upended the rules in the automotive industry, where traditionally scale is what counts. In turn, that's given the group a market value of $77.6bn, compared to $37.4bn for Ford, despite producing around 17 times fewer cars last financial year.

Tesla's done a lot of work to close the production gap over the last few months - with total vehicle production up 50% year-on-year. However the company's yet to prove it can be sustainably profitable. A couple of quarters in the black at the end of 2018 gave way to a pretty ugly start to 2019, and the group raised another $2.4bn from the market to keep things ticking over.

Investors will hope more recent results become the new norm. But we're going to wait for a few repeat performances before we turn more upbeat.

Having said that we think the positive, and not insubstantial free-cash flow, is perhaps more important in the short term. It means Tesla could be self-funding, which would be a big relief for investors, as Tesla's breakneck expansion means big demands on the cash pile. If the group's able to generate enough cash to fund its own growth, rather than relying on the market, it's a big step in the right direction.

The other good news is operating performance is looking better. The ramp up of Tesla's 'affordable' Model 3 has seen total deliveries rise 46.6% year-on-year for the fourth quarter. Worries that demand could flag when a US subsidy for electric vehicles was scrapped last year seem to have been unfounded - although wider economic worries could yet drag on sales of what is still a premium product.

Having settled his most recent spat with regulators, Tesla's founder, Elon Musk, has been directing investor attention at other big technology initiatives in the pipeline - autonomous vehicles and the recently unveiled Cybertruck. However, we suggest investors remain focused on the more tangible automotive manufacturing business for now.

Register for updates on Tesla

Third Quarter Results - 24 October 2019

Tesla reported a decline in both revenues and profits in the third quarter, down 8% and 34% respectively. However, profits of $342m were well ahead of market expectations, and the group generated $371m of free cash.

Total revenue was $6.3bn, with the decrease reflecting a rise in leased vehicles - where only a portion of revenue is recognised up front. Revenue was also impacted by a decline in the average selling price of Model 3 cars.

Profit surprised the market by coming in at $342m, reflecting lower costs and stronger margins. Automotive margins improved 3.93 percentage points to 22.8%.

Tesla generated positive free cash flow in the quarter of $371m. As a result, Tesla finished the quarter with cash and cash equivalents of $5.3bn, 8% more than last quarter. The group now expects to be mostly self-funding going forwards, underpinned by positive quarterly cash flows.

The Shanghai Gigafactory is progressing ahead of schedule, and the Model Y is now due to launch next summer.

The group is "highly confident of exceeding 360,000 deliveries this year", which is slightly lower than previous guidance of 360,000 to 400,000.

Find out more about Tesla shares including how to invest

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.


Previous Tesla Inc updates

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used.

Share

The London Stock Exchange does not disclose whether a trade is a buy or a sell so this data is estimated based on the trade price received and the LSE-quoted mid-price at the point the trade is placed. It should only be considered an indication and not a recommendation.

Trades priced above the mid-price at the time the trade is placed are labelled as a buy; those priced below the mid-price are sells; and those priced close to the mid-price or declared late are labelled 'N/A'.