Jan 30, 2020 - Economy & Business

Tesla's soaring stock raises questions about its future growth

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

That sharp spike you see in Tesla's already-high stock price is what happened Wednesday when the electric automaker reported a $105 million fourth-quarter profit and offered a rosy take on what's ahead.

Why it matters: Tesla and CEO Elon Musk kick up lots of dust, but the bottom line is that the trajectory of the world's largest electric vehicle seller matters a lot for the tech's wider adoption — even as competitors ramp, up too.

Where it stands: Axios' Joann Muller has lots of good info about the earnings rollout in her full story, but here are some toplines...

  • Tesla expects to remain profitable going forward, with "possible temporary exceptions" around product launches and ramp-ups, it said in the earnings report.
  • Record 2019 deliveries helped drive revenues up 19% over the prior quarter, but profit margins fell because Tesla sold more of the lower-priced Model 3.
  • Its upcoming Model Y compact SUV is ahead of schedule — the production ramp has begun and it plans to start deliveries by the end of this quarter, the company said.
  • Overall, Tesla said full year 2020 deliveries across its product lines will "comfortably exceed 500,000 units."

But, but, but: Battery cell production capacity is the biggest potential bottleneck to growth — as seen in Tesla's decision to not accelerate its semi-truck production beyond limited numbers, Musk said.

  • Increasing that capacity is the top priority, he said.

What they're saying: Tesla tends to lurch from good stretches to near-crises, so there are predictably divided views about how to assess the moment. A sampling:

  • Via MarketWatch, a Wedbush Securities analyst called the results "potentially 'game changing,'" in a note that says it could signal a "new era" for Tesla.
  • “They are not even remotely out of the woods,” Peter DeCaprio of the investment firm Crow Point Partners tells the Los Angeles Times.
  • "At $650, the after-market [stock] price is pretty much divorced from any reasonable underlying math," writes Bloomberg columnist Liam Denning.

Go deeper: Tesla declares 2019 a turning point

Go deeper