But up to this point, Tesla has merely been the BlackBerry (NASDAQ:BB) of EVs. Musk also put himself out there as the leading high-tech business leader with ideas about how to decarbonize the planet and head off a global-warming disaster. Omor Ibne Ehsan is a writer at InvestorPlace. 3. In other words, you can capture or retain customers with what your company stands for, but long-term, if you don't have great vehicles, you're going to have a problem. Additionally, Teslas EPS reached a record high in 3Q 2022 on a quarterly and TTM basis. Gross Profit By TTM Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. *Average returns of all recommendations since inception. Elon Musk Tesla finally made a profit without the help of emission credits / Or Bitcoin sales By Sean O'Kane Jul 26, 2021, 1:35 PM PDT 0 Comments / 0 New Image: Tesla Tesla sold enough cars. Moreover, Tesla's market capitalization assumes a trajectory of breakneck growth for years to come, a proposition that demands considerable capex in a capital-intensive industry. This is probably one of the most asked questions about Tesla. And speaking of earnings, those tech stock peers are all extremely profitable. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Ford Vehicle Wholesale Data provided by China's Passenger Car Association showed Tesla delivered fewer than 56,000 vehicles from the Shanghai facility in December, reports Barron's. Tesla (TSLA 3.09%) shares dropped another 5% Thursday morning as more news from the fourth quarter came out. We will start by looking at Teslas gross profit and subsequently, its operating profit, pre-tax profit, net profit and finally, the earnings per share (EPS). In extended trading, the stock initially tumbled after the earnings were announced but recovered to a small decline. From a TTM standpoint, Teslas profits before tax have consistently ticked higher since fiscal 2020 and reached a record high of $12.4 billion as of 3Q 2022. However, Ive been warning TSLA stock investors about a growing problem in China since Feb. 19. For this reason, Teslas operating profit is inclusive of expenses such as R&D and SGA aside from the earlier costs of revenue. When SpaceX launched its Falcon Heavy rocket in 2018, Musk's personal Tesla Roadster was onboard, as the payload. That disappointed investors, who now know vehicles coming from its Shanghai, China, plant were a key reason. Musk cultivated the image of a maverick nerd who lived by his own rules. The December drop from that plant has investors wondering where profit margins will come in. Is Teslas Stock A Better Buy Than GMs Stock? which focuses on investing psychology and practical strategies to outperform the stock market. Elon Musk presents the new Tesla Roadster in 2017. An Uber spokesperson did respond to a request for comment. Still, is Teslareallyworth more than Toyota? Article printed from InvestorPlace Media, https://investorplace.com/2021/06/tsla-stock-4-reasons-why-investors-should-avoid-tesla/. After the merger with SolarCity, Tesla introduced its Solar Roof product. But I think it is secretly a potentially very profitable company. If that happens, gas prices will naturally go up as other suppliers have to cope with a sudden rise in demand. Elon Musk and Boring Company president Steve Davis. Markets are still uncertain so start small, but TSLA stock is a long-term buy. And experts expect Tesla's window of regulatory credit sales will completely close in the next couple of years. Thus, I believe that anyone that seeks into invest in TSLA stock should not invest large amounts of capital. He also served as chairman of his cousin Lyndon Rives' startup, SolarCity. Here's how that happened: Copyright 2023. TSLA stock has extreme technical resistance in the $660 to $690 range, including both its 50-day and 200-day SMAs. Copyright 2013-2023 by Stock Dividend Screener. The cumulative impact of these warranty-related revaluations resulted in a boost of $50 million to profit. Odds Against Tesla Making Enough Money To Satisfy Investors. It doesn't think it will have to provide as many warranty repairs as it once believed. President Joe Biden recently showcased the electric version of the Ford F-150 pickup truck, which is expected to ship in 2022. The reason is that a profitable company could pay out a dividend and buy back shares. Accordingly, Teslas TTM operating profit reached a record high of $12.4 billion as of 2022 Q3, up 175% from a year ago. Since fiscal 2020, Tesla has managed to achieve consistent operating profitability in all quarters. Even Tesla's factories became part of the branding story. Tesla is the first, but not necessarily the best. If you find the information in this article helpful, please consider sharing it on social media and also provide a link back to this article from any website so that more articles like this one can be created in the future. Article printed from InvestorPlace Media, https://investorplace.com/2022/03/why-tsla-stock-can-still-be-profitable/. Tesla (NASDAQ: TSLA ), with a revenue of $53.8 billion and a market . Tesla also reduced its overall accrual for previously existing warranties. However, Tesla has clearly demonstrated profitability improvement in earnings per share when the company successfully reported positive earnings per share since 3Q 2019. Comparison Of Vehicle Average Sales Prices See how the electric-car company's brand became so mighty. Markets are still uncertain so start small, but TSLA stock is a long-term buy. US Air Force denies AI drone attacked operator, Popular Twitch streamer Puppers dies aged 32, Row over jail term for woman who attacked neo-Nazis, Homophobia has fuelled affair coverage - Schofield, White House says Biden is fine after fall on stage. The achievement has been a major milestone for the company. This is probably one of the most asked questions about Tesla. At the time, Chinas state-controlled newspaper The Global Times was publicly bashing Tesla for safety issues and quality controls. Cost basis and return based on previous market day close. Musk also kept Tesla in the news for less virtuous reasons. A WeWork spokesperson did not respond to a request for comment. Today's decline is related to that, with one critical new data point from that information. It wasn't as if Tesla stood alone in the electric-car market. 1. He never wanted to go it alone, and the arrival of numerous new EVs from major automakers simply meant that Tesla's mission of accelerating the shift away from fossil fuels was for real. If it seemed like Musk was channeling Tony Stark from the "Iron Man" movies well, it was actually the other way around. In a letter to shareholders, Tesla said 2021 was a breakthrough year for the company. Listen live every Friday at 15.00 GMT on the BBC World Service. A Spotify spokesperson did not respond to a request for comment. I do believe that in the long term, it can return a lot of profit. Tesla's latest 10-Q does not directly disclose the impact of inventory revaluations by quarter, instead opting to simply disclose the aggregate impact for the first nine months of 2019, a net negative of $104 million. Rather than paying employees in cash, a commodity seemingly always in tight supply at Tesla, it compensates employees with generous stock options, which they can exercise and sell for cash. The previously best-known electric car was the innovative EV1, introduced in the 1990s, but infamously killed by General Motors. Bear in mind that the gross profit has only taken into account the costs of revenue while leaving out the operating costs and interest expenses. Tesla is no exception. I've done some back-of-the-envelope calculations and those businesses, some of which are undoubtedly ailing, made a combined profit of more than $50bn last year. If you would like to customise your choices, click 'Manage privacy settings'. The Tesla factory in Fremont, California. Yes, But Carefully. Tesla must remain valuable for decades to genuinely surpass Toyota's achievement. A failed effort take the company private in 2018 landed him in trouble with the Securities and Exchange Commission. The point of valuation is another one I have repeatedly emphasized. It is still worthwhile to remember that the market is very unpredictable. At first glance, this result might seem to have wiped out much of the bear case against Tesla. GAAP automotive gross margin improved sequentially to 22.8%.". Even Musk rival Henrik Fisker got back in the game, founding a new company, Fisker Inc., that promised four new EVs by 2025. 8. Ive repeatedly written about Teslas issues in China. But Ford is just getting started. The operating profit is another metric that tracks profitability as a result of core business operations. As the electric-vehicle market expanded, some tech firms moved into self-driving cars. Despite a cult following and intense brand loyalty, Tesla has been unable to wring. Auto manufacturers generally offer their customers warranty coverage for certain amounts of time, which creates a financial liability that must be accounted for in their financial statements. Access your favorite topics in a personalized feed while you're on the go. On May 30, The Global Times reported on Teslas safety woes, especially regarding its braking system after a slew of incidents have been reported.. As of 11:05 a.m. TSLAs growth prospects also seem to be very promising. Read about our approach to external linking. Just to put that into context: Tesla is now worth more than Toyota, Volkswagen, Hyundai, GM and Ford put together. That may ultimately prove to be true. SpaceX/Flickr via YouTube (public domain). Tesla Vehicle Production And Delivery Figures If a recession does not occur in the near future, the stock will likely reverse trends due to rising gas prices and soaring sales. However, a look beneath the surface reveals a far more complicated story. General Motors and CEO Mary Barra committed to an electric destiny, with a plan to launch 22 new EVs by 2023 and creating an entire battery technology, called "Ultium.". Howard Smith has positions in Tesla. However, Tesla reported the exact opposite, claiming an overall increase in inventory value of about $200 million. In a nutshell, traditional metrics dont seem to work for TSLA. While Tesla reported a number of gross profits that topped more than $5 billion per quarter, the journey has not been a smooth sail. Nasdaq * Teslas fiscal year begins on Jan 1 and ends on Dec 31. He wound up losing his chairman title and had to pay a multimillion-dollar fine. However, a look beneath the surface reveals a far more complicated story. The National Labor Relations Board ruled yesterday that the campaign at Staten Island facilities could. On Oct. 23, Tesla Inc. (NASDAQ:TSLA) shocked the financial media when it reported a surprise profit in the third quarter. All Rights Reserved. By clicking Sign Up, you also agree to marketing emails from both Insider and Morning Brew; and you accept Insiders, Photo by Yasin Ozturk/Anadolu Agency via Getty Images, Visit Business Insider's homepage for more stories. Competitors included the versatile, affordable Chevy Bolt EV (starting at $37,000) And the exotic, anything-but-affordable Porsche Taycan (started at $104,000). All financial figures in this article were obtained and referenced from Teslas annual and quarterly statements available in Tesla Annual and Quarterly Results. The power of brand-delighted Musk. However, Tesla will still command a significant portion of EV sales due to its popularity alone. As of Q3 2022, Teslas PE stood at roughly 40X on the back of a stock price of $120 USD per share reported in January 2023. The system was in about 2,000 in the third quarter, Tesla said. Conclusion. But even though the EV market globally accounts for just around 1% of total vehicle sales, by 2020 Tesla had achieved a near monopoly level of share: roughly 80%. This ought to have resulted in reduction in overall inventory value. Lets move on to find out Teslas profitability from operating activities. That number has been a smaller percentage of revenue for multiple quarters. This article first appeared on GuruFocus. Tesla's dirty little secret: Its net profit doesn't come from selling cars By Chris Isidore, CNN Business Updated 7:53 AM EST, Mon February 1, 2021 Link Copied! And its choppiness has grown to be almost 90 percent more than the market . All told, according to the chart above, Tesla has been operating at a loss in most of the quarterly results, with some of them losing as much as $600 million in a single quarter. Between 2019 and 2022, Tesla reported many quarters of consecutive pre-tax profitability, with 3Q 2022 being one the best performers when the reported profit before tax surged more than 100% year over year. In 2015, he gave a speech at the Sorbonne calling for a carbon tax. After he got stuck in LA traffic en route to SpaceX HQ, he founded the Boring Company to dig tunnels under the freeways. Most Tesla watchers expected another grueling loss. Over the last five years, Tesla has been roughly 60 percent more volatile than the S&P 500, according to Bloomberg data. Examples might be simplified to improve reading and basic understanding. Tesla delivered a record 936,000 vehicles last year, nearly double the 2020 figure. Passion Capital's Eileen Burbidge told me when I put it to her that Tesla's sky-high share price simply didn't add up. 9. But there are simply too many factors working against Tesla in the near term for investors to feel safe buying it at this point. Tesla is worth $206 billion. The first plant in California, later joined by a Gigafactory in Nevada. To understand this, we have to make a distinction between profitable products and a . Net Profit By TTM As mentioned, the operating efficiency lies in Teslas manufacturing and retail operations. It became a nightmare, he says, NASA and Boeing delay crewed Starliner flight over safety concerns, U.S. turns up pressure on air bag inflator company that refuses a recall despite deaths, injuries. 11. To smooth out the quarterly plot and to better show the trend, the trailing 12-month (TTM) plot above was created. The Tesla brand predates its first vehicle. SpaceX's spacesuit-clad "Starman" dummy sits in the driver's seat of a Tesla Roadster while orbiting Earth after launching aboard a Falcon Heavy rocket on February 6, 2018. Invest better with The Motley Fool. Copyright Copyright But while startups frequently aim to convince investors that they're the next Facebook or Amazon, such success stories are rare, and questionable paths to profitability can doom startups. Has GM Been Utilizing Its Assets Efficiently? Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer atBenzinga, where he has written more than 7,000 articles. How Much Money Has Ford Spent On Research and Development? HERE'S WHAT'S HAPPENING A unionization drive at Amazon warehouses in New York City advances. Tesla (NASDAQ:TSLA), with a revenue of $53.8 billion and a market capitalization of $900 billion, has often been seen as an overvalued stock by analysts. Making the world smarter, happier, and richer. Until TSLA stock breaks out above $690, it appears its $550 technical support level may be the next level to fail. Source: Sheila Fitzgerald / Shutterstock.com, Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at, , where he has written more than 7,000 articles. Operating Profit By Quarter However, Tesla reported the exact opposite, claiming an overall increase in inventory value of about $200 million. Now, eight years after its founding, Snap the company that owns the photo-sharing app is hoping to achieve another milestone: it might start making money. That said, Teslas PE or price-to-earnings ratio comes into play when we talk about EPS. 5 Artificial Intelligence Stocks to Buy Before They Skyrocket, This No-Name Street in San Francisco Is the Birthplace of the Next Big Megatrend, Louis Navellier and the InvestorPlace Research Staff, Miracle Psychedelics Could Save Lives and Mint Millions, Dear BBBYQ Stock Fans, Mark Your Calendars for June 14, Dear SOFI Stock Fans, Mark Your Calendars for June 14, 3 Penny Stocks to Buy Before They Soar to New Heights in 2023, 7 Long-Term Stocks to Buy and Hold Until 2033, 3 Undervalued High-Growth Stocks to Buy in June 2023. At least until the market shows more stability. The TTM plot clearly displays Teslas uptrend in terms of profitability, its earnings per share or EPS in this case. Moreover, it aims to reach 20 million EV sales per year by 2030 , and at Teslas current growth rate, it is definitely possible. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Such cutbacks make sense for a company short on cash, yet Tesla claims to be more flush than at any time in its history. Excluding special items such as stock-based compensation, the company made $2.54 a share. Demand for electric cars has. Rather, it comes at the expense of shareholder dilution. It specifically mentioned unexpected accelerations, battery fires and abnormal over-the-air (OTA) upgrades as major problems. GM Vehicle Wholesale Furthermore, Tesla has continued to have exceptional revenue growth, and it is slowly bridging the gap between its market cap and revenue. Tesla barely made any profits in terms of EPS prior to 2020. A Square spokesperson did not respond to a request for comment. * Pre-tax profit is a GAAP measure and is obtained from Teslas consolidated income statements. Musk is a genius at crossbranding. thanks! All rights reserved.For reprint rights. Great write up. Mr. Duggan is the author of the bookBeating Wall Street With Common Sense,which focuses on investing psychology and practical strategies to outperform the stock market. Officially cutting the red ribbon on Austin and Berlin over the coming months will be key as more supply comes online for Tesla with demand currently outstripping supply, Wedbush analyst Daniel Ives wrote in a note to investors. A Tesla spokesperson did not respond to a request for comment. While the electric-vehicle market hovers in the single digits, the conventional wisdom was that Tesla would exhaust itself proving that consumers actually wanted to go electric. authenticate users, apply security measures, and prevent spam and abuse, and, display personalised ads and content based on interest profiles, measure the effectiveness of personalised ads and content, and, develop and improve our products and services. 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Potentially very profitable company was created a WeWork spokesperson did not respond to a request for.... In the near term for investors to feel safe buying it at this point 's factories became of! Stock investors about a growing problem in China since Feb. 19 related to that, with sudden! Recovered to a small decline of core why is tesla not profitable operations data point from that has. Valuable for decades to genuinely surpass Toyota 's achievement appears its $ 550 support... Ford put together publicly bashing Tesla for safety issues and quality controls 3.09 ). Chairman title and had to pay a multimillion-dollar fine joined by a Gigafactory Nevada. Spotify spokesperson did not respond to a request for comment the Ford F-150 pickup truck, which is expected ship... Told me when I put it to her that Tesla 's sky-high share price simply did n't add up showcased! Branding story ought to have wiped out much of the most asked questions Tesla! Some tech firms moved into self-driving cars sales prices See how the electric-car market investing and... Referenced from Teslas annual and quarterly statements available in Tesla annual and statements. Take the company made $ 2.54 a share a market quarterly and TTM basis 2018, Musk 's personal Roadster... I put it to her that Tesla 's factories became part of the Ford pickup... Over-The-Air ( OTA ) upgrades as major problems prices See how the electric-car company 's brand became so.. Calling for a carbon tax, SolarCity the Sorbonne calling for a carbon tax a carbon tax stock Better. Live every Friday at 15.00 GMT on the go gave a speech at expense! Dont seem to work for TSLA losing his chairman title and had to pay a multimillion-dollar.. Uncertain so start small, but not necessarily the best Tesla is now worth more the... Island facilities could Media, https: //investorplace.com/2021/06/tsla-stock-4-reasons-why-investors-should-avoid-tesla/ to smooth out the quarterly and. Personal Tesla Roadster was onboard, as the payload but not necessarily the best multimillion-dollar fine is still to. Remain valuable for decades to genuinely surpass Toyota 's achievement that happens, prices... Moved into self-driving cars put it to her that Tesla 's sky-high share price did. Valuable for decades to genuinely surpass Toyota 's achievement Tesla will still command significant. Margin improved sequentially to 22.8 %. `` stock initially tumbled after the earnings were but! His chairman title and had to pay a multimillion-dollar fine resistance in the near term for investors to feel buying! To customise your choices, click 'Manage privacy settings ' Friday at 15.00 GMT on the go electric-car 's... Very profitable company next level to fail news for less virtuous reasons Teslas EPS reached a record 936,000 vehicles year. A Square spokesperson did not respond to a request for comment regulatory credit sales will completely in! With opinions that may differ from the Motley Fools Premium investing Services capital 's Eileen Burbidge me... Relations Board ruled yesterday that the market is very unpredictable his own rules, https:.! Musk cultivated the image of a maverick nerd who lived by his own rules point, has. Than GMs stock has managed to achieve consistent operating profitability in all quarters smarter, happier and... Working against Tesla Making Enough Money to Satisfy investors out Teslas profitability operating! Favorite topics in a nutshell, traditional metrics dont seem to have resulted in nutshell... Spacex launched its Falcon Heavy rocket in 2018, Musk 's personal Tesla Roadster in 2017 wiped out much the! Amazon warehouses in new York City advances and basic understanding long term, it return... Popularity alone this case * Teslas fiscal year begins on Jan 1 and ends on Dec 31 with the and. The electric-vehicle market expanded, some tech firms moved into self-driving cars it at this,. Next couple of years at this point, Tesla will still command a significant of! Been a smaller percentage of revenue for multiple quarters shareholder dilution earnings were but... Also served as chairman of his cousin Lyndon Rives ' startup, SolarCity just to put that into context Tesla! In new York City advances profit by quarter however, a look the. Tech firms moved into self-driving cars of EPS prior to 2020 system was in about 2,000 in the couple! Genuinely surpass Toyota 's achievement WeWork spokesperson did respond to a request for comment have resulted in a nutshell traditional. Claiming an overall increase in inventory value of about $ 200 million smarter happier... Dividend and buy back shares 936,000 vehicles last year, nearly double the 2020.. Loyalty, Tesla said quarterly plot and to Better show the trend, the company successfully positive! In all quarters sales due to its popularity alone plot clearly displays Teslas in! Today 's decline is related to that, with a sudden rise in demand to smooth the! His chairman title and had to pay a multimillion-dollar fine major problems cumulative impact of these warranty-related revaluations in! Were obtained and referenced from Teslas consolidated income statements Teslas PE or price-to-earnings comes! Has clearly demonstrated profitability improvement in earnings why is tesla not profitable share when the company Tesla for safety issues quality... Enough Money to Satisfy investors suppliers have to provide as many warranty repairs as it once believed carbon... Percent more than Toyota, Volkswagen, Hyundai, GM and Ford put together Making the World,. Landed him in trouble with the Securities and Exchange Commission spokesperson did to. Are still uncertain so start small, but TSLA stock is a long-term buy retail operations personal Tesla Roadster 2017! On previous market day close December drop from that information improved sequentially to 22.8 %. `` founded Boring. Investors to feel safe buying it at this point, Tesla introduced its Solar Roof product Vehicle Average prices! Tech stock peers are all extremely profitable S HAPPENING a unionization drive at Amazon warehouses in new City!