Tesla Shares Violently Unchanged As Investors Try To Figure Out What Musk Just Reported

Following a shockingly strong third quarter, which saw Tesla report a dramatic and unexpected reversal in both profitability and cash flow, which many investors suggested may have top ticked the company's prospects, and following a recent cut in the cost of its vehicles by $2,000 which skeptics suggested indicated a drop in demand just as many competitors are starting to offer competing products, while also laying off 7% of its global workforce which led to concerns about the company's lofty valuation which has largely been built around growth, everyone was wondering what would happen to that growth narrative if demand for Tesla's current lineup is drying up, and the $35,000 version of the car is still months away?

And so, with Elon Musk tweeting up a storm in the hour leading up to the company's earnings release in which he's written about black holes, entropy, the end of the universe, the Multiverse, and "the beauty of Fluid Dynamics", we got a big part of the answer moments ago when Tesla reported Q4 earnings on a day when its stock closed 3.8% higher, its best day in over three weeks, and when the company announced the following numbers:

  • 4Q adjusted EPS of $1.93 missed the estimate of $2.14
  • 4Q revenue of $7.23BN beating estimates of $7.07BN (range $6.79 billion to $7.72 billion)
  • 4Q capital expenditure of $325MM, well below the estimate of $604MM
  • 4Q free cash flow of $909.6 million, well above the estimate of $411.5 million

Despite the bottom line miss, this was the ninth consecutive quarter that Tesla beat consensus revenue estimates; full-year revenue was up 82% over 2017, following a 68% increase a year ago. This is what revenue looks like:

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And earnings, both adjusted and GAAP: 

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While some expressed concerns about Tesla's ability to repay the upcoming March 1 convertible maturity, Musk does not appear too concerned: "We have sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019" the CEO said in the investor letter.

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