Being one of the most hotly-debated companies in the world, with an equally controversial and enigmatic CEO and co-founder in Elon Musk, the company has had its shares of ups and downs. Through privatization blunders, exaggerated claims by its CEO and pressure from short-sellers and more, Tesla has persevered.
Now, it has reported a refreshingly positive Q4 2019.
Ending the year with a bang
Late last week, it was time for Tesla and other major US companies to disclose their Q4 earnings results. Once again, Tesla has been a source of surprise, so much so that its stock spiked as much as 13%.
According to the company’s Q4 and Fiscal Year (FY2019) report, 2019 was a turning point for Tesla.
“We demonstrated strong organic demand for Model 3, returned to GAAP profitability in 2H19 and generated $1.1B of free cash flow for the year,” the company said. “We achieved strong cash generation through persistent cost control across the business.”
Quarter-end cash and cash equivalents increased by $930M QoQ to $6.3B.
In terms of revenue, Tesla reported a $930M increase in cash and cash equivalents in Q4 to $6.3B.
The company’s revenue growth in 2019 was positively impacted by a strong increase in vehicle deliveries, bolstered by stong Model 3 demand and a new Gigafactory in Shanghai, China, which will allow the company direct access to the Chinese market. It delivered 112,095 vehicles during the quarter, a record for the company. As for the FY, Tesla delivered 367,200 units.
Here’s how the company did versus expectations, as per CNBC:
- Earnings: $2.14 adjusted vs. $1.72 per share expected.
- Revenue: $7.38 billion versus $7.02 billion, expected according to Refinitiv.
As for profitability, Tesla made a $105 million in net income after applying generally accepted accounting principles (GAAP), a 25% decline from Q4 2018. Last quarter, Tesla made a profit as well, earning $143 million in Q3 2019. However, the automaker is still in the red annually, having made a loss across the fiscal year.
“Tesla still didn’t turn an annual profit — in fact, it lost $862 million in 2019,” the Verge notes, “But that was better than the $1 billion loss the company posted in 2018.”
In fact, “Tesla has not yet made a profit over a 12-month period in its 17-year history,” Business Insider reminds.
What’s next in 2020
Following a strong end to 2019, Tesla is feeling confident going into 2020. They will also put more focus on non-automobile products, like solar roof panels and energy storage equipment.
“For full year 2020, vehicle deliveries should comfortably exceed 500,000 units,” Tesla said. “Both solar and storage deployments should grow at least 50% in 2020.
“We expect positive GAAP net income going forward, with possible temporary exceptions, particularly around the launch and ramp of new products. Continuous volume growth, capacity expansion, and cash generation remain the main focus.”