Jan 30, 2020

Tesla's soaring stock raises questions about its future growth

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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

Tesla shares plummet after wild few days of trading

Source: FactSet; Chart: Axios Visuals

Shares of Tesla closed down more than 17% on Wednesday, shredding more than $27 billion in market cap value.

Between the lines: Wednesday ended a streak of eye-popping stock gains for Tesla. Per CNBC, it was the second-worst day for the stock ever.

Tesla shares soar, company gains $23 billion in market value

Data: Money.net; Chart: Axios Visuals

Tesla shares gained 19.89% on Monday, or over $129 per share, increasing the automaker's market cap by a whopping $23.33 billion.

Driving the news: Panasonic this morning announced that its joint battery-making venture with Tesla turned profitable in the fourth quarter of 2019, although it did not provide specific numbers. A bank analyst also upgraded Tesla today, while one of the company's largest outside shareholders disclosed a slightly increased stake.

Go deeper: Tesla declares 2019 a turning point

The vindication of Elon Musk

Photo Illustration: Sarah Grillo/Axios. Photo: Jörg Carstensen/picture alliance via Getty Images

Tesla stock has been in Ludicrous Mode for the past few days. Given its bonkers gyrations, it's now easy to see why CEO Elon Musk might feel that he was right all along in wanting to take the company private back in 2018.