Tesla (NASDAQ 🙂 delivered what investors expected yesterday. The world's most valuable automaker reported a fifth consecutive profit, reaffirming that it remains on track to deliver half a million cars by 2020.
This strong performance is no joke in an environment where other car makers are struggling amid a pandemic-induced global recession. The California-based electric car maker reported earnings of $ 0.767 per share on an adjusted basis, surpassing analysts' consensus estimate at $ 0.55 per share.
CEO and Founder Elon Musk described the past three-month period as "our best quarter in history." The company saw production and delivery hit records. Tesla also ended the quarter with $ 14.5 billion in cash, its highest level ever, boosted by the $ 5 billion of stock sales during the period.
Shares of Tesla were up about slightly Thursday to close at $ 425.79, contributing to its more than 400% rise this year.
Tesla 1 Year Pass.
The company must deliver more than 181,000 cars in the last three months of the year to meet its target of 500,000 vehicles, an increase of 30% from the previous quarter.
"While achieving this goal has become more difficult, delivering half a million vehicles by 2020 remains our goal," the company said in a statement. This will largely depend on increased production at the Shanghai plant and higher production of Model Y.
No big surprise
But despite these promising results and future projections top analysts were unwilling to rethink their views on Tesla & # 39; s stock.
"Net-net, we don't think the quarter will change the long-term terminal value debate much – seen in relation to the current stock price," Citi analyst Itay Michaeli said in a note.
Tesla's third-quarter results were generally strong and slightly better than Street's estimates, according to Bank of America. But "there was little in the way of a significant positive surprise that we think bulls hoped for."
Tesla has made just $ 0.50 a share for the past four quarters, so the stock is trading at over 800 times its trailing earnings. Its market value is approaching $ 400 billion, or about five times the combined value of Ford (NYSE 🙂 and General Motors (NYSE :).
According to a Wall Street Journal analysis, Tesla's profits are greatly flattered by the sale of legal credits to help rivals meet the emissions obligations. Tesla has posted $ 1.3 billion in such sales over the past four quarters, with a 100% profit margin. Total net income for that period is only $ 556 million.
"That profit source may not be available in the coming years as more electrical competition from older automakers comes online," wrote WSJ's Charley Grant in a post-earnings analysis.
Bottom Line
Tesla & # 39; s latest earnings report does not change our view that the company's recent results have already been factored into the stock valuations and that the stock is significantly are overvalued against the fundamentals.
In the absence of new catalysts, it makes sense for investors to make some profit and wait on the sidelines for a better entry point. After a breathtaking rally this year, Tesla stocks will continue to be subject to downward pressure, especially when many top analysts believe the current rally has run its course.
