L.Luxury electric car maker Tesla (TSLA) will publish the results for the first quarter of the 2021 financial year after the closing bell on Monday. Tesla stock has fallen as much as 40% since hitting a 52-week high of $ 900 to a low of $ 539 on March 5. However, since that low, the stock has risen as much as 46%. This volatility rate at Tesla goes without saying.
Nevertheless, in addition to a strong delivery forecast, investors expect clear signs of improvement, particularly with regard to profit margins. The company already reported a preliminary delivery record of 184,800 vehicles in the first quarter, an increase of just over 4,000 vehicles compared to the fourth quarter. The sequential increase was aided by strong Model 3 and Model Y sales, which grew more than 21,000 vehicles from the fourth quarter. Meanwhile, Model S and Model X sales have been more subdued as the company only reported 2,000 units.
As a result, the market expects more robust numbers for both the Model S and Model X for the first quarter. During the fourth quarter conference call, Tesla CEO Elon Musk said that production and shipping of both models will begin in February. The market will want the production and delivery guidelines to be updated in the second quarter. After delivering 500,000 vehicles in 2020, Tesla is expected to increase vehicle deliveries by between 50% and 70% in 2021. With four double hits (sales and profits) in a row, few companies have achieved better results in the past year. Can it go on Monday?
In the three months through March, Wall Street expects Tesla to make 78 cents per share on sales of $ 10.29 billion. This compares to the same quarter last year when earnings were 23 cents per share on sales of $ 5.99 billion. For the full year ending in December, earnings are expected to grow 98% year over year of $ 4.32 per share, while full year revenue of $ 49.3 billion is expected to increase 31% year over year.
Tesla’s increased focus on its growth strategy, namely manufacturing and profit margins, has been a key factor in the company’s recent success. The company goes back to the last three quarters of the report and has achieved a production capacity rate of more than 90% compared to the previous four quarters. This shows the efficiency of production that Tesla has been working to achieve, which in turn helps not only increase annual shipments but also increase sales and profit margins.
In the fourth quarter, Tesla had total sales of $ 10.74 billion. Automobile sales accounted for more than 86%, or $ 9.31 billion. Automotive’s gross margin was 24.1% compared to 22.5% in the previous year. Impressive numbers given the headwinds it faced. Often compared to the empire of Ford (F.) or General Motors (GM), Tesla’s growth path and its diverse product portfolio, which includes batteries, software, solar roofs / panels, are placed in a different category. The company also expects Tesla Semi shipments to begin this year.
For these reasons, among others, Cathie Wood’s ARK Investment Management, which owns an ETF with a 10% stake in Tesla, says the shares could be valued at up to $ 3,000 per share by 2025. Short-term Wedbush Securities Dan Ives Tesla, who has a bull-case price target of $ 1,250 for Tesla, believes Tesla has a strong setup backed by the momentum of electric vehicles. Tesla definitely needs to stay on the (electric) production / delivery pedals to support this level of trust.
The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.