Tesla posts record first quarter earnings
We are increasing our Tesla fair value estimate to $354 from the time value of money adjustment in our model.
Mentioned: Tesla Inc (TSLA)
ANALYST NOTE | US electric vehicle powerhouse Tesla (TSLA) announced record quarterly results on Monday. Revenue increased 74 per cent year over year but fell 3.3 per cent sequentially as combined Model S and Model X deliveries fell by 83 per cent as the company transitions those vehicles to new generation models coming in second and third quarter, respectively.
Total deliveries still were a record though thanks to 13.1 per cent sequential growth in combined Model 3 and Model Y sales.
We remain comfortable modeling total 2021 deliveries of 800,000 units as demand continues to be strong, the S and X should drive incremental growth later this year. Management talked about combating the semiconductor shortage by quickly finding new microcontrollers and developing new firmware for chips made by new suppliers. The call had no discussion of the shortage so it’s unclear if this mediation effort will last, but we sensed no apprehension from management on the call.
We are increasing our fair value estimate from $349 to $354 from the time value of money adjustment in our model. The company was trading at a 112 per cent premium to fair value at the last close of $738.2.
Tesla Inc TSLA | Price vs Fair Value
USD | As of Apr 26, 2021 | Index: Morningstar US Market TR USD
Free cash flow of $293 million fell significantly from fourth quarter’s $1.9 billion but was much better than the $895 million burn in first-quarter 2020. Compared with fourth quarter, working capital was essentially a nonfactor and capital expenditures rose 17 per cent to $1.3 billion.
Emission credit sales of $518 million grew 46 per cent year over year and almost equaled pretax income of $533 million. Management maintained its high level guidance for 2021 deliveries in excess of the long-term goal of 50 per cent annual growth and total capacity remains at 1.05 million units.
Berlin and Texas plants remain due to open late this year which will increase this figure.
We think the stock continues to trade on the chance Tesla becomes massively larger over time rather than on any single quarter’s results.