In its first quarterly report following its inclusion in the S&P 500 index, Tesla has given a mixed result.
The EV maker surpassed analysts’ expectations on revenue but fell short on earnings per share projections.
In the report released after the bell, Tesla’s fourth-quarter revenue stood at $10.74 billion compared to the $10.4 billion forecast.
On the other hand, adjusted EPS stood at 80 cents in comparison to the $1.03 expected.
TSLA shares instantaneously fell by 5% along with the release of the report before regaining some leverage. It steadied with a 2.14% drop to $864.16 per share at the stock market’s close.
During the quarter, the firm invested heavily in research and development which took $522 billion from its take home.
Moreover, capital expenditures stood at $1.15 billion, signifying continued commitment to invest in best practices and technology.
Consequently, the market trend shifted towards lower-priced EVs. This increased demand for Model S and Model Y which are at a relatively lower-priced margin.
Along with the lukewarm earnings, the S&P juggernaut said that it expects sales to follow an upward trajectory during the year.
It targets to increase average annual growth by 50% during the year, with hopes of better pandemic management compared to the previous year.
In addition to the events to be under close monitoring in the first quarter of 2021, Elon Musk plans to make the premium drivers’ assistance software subscription-based.
This implies that users will now have the discretion to dismiss paying $10,000 for the Full Self Driving option, making it an on-demand option.
During the period, gross margins were at 19.2% which its lowest position since the last three months of 2019.
Questioning the Portfolio
Currently, the market is divided on whether TSLA’s stock price is overvalued as its portfolio remains relatively restricted.
Having been surged by roughly 700% in 2020, spectators cannot help but feel that way.
Experts in the field continuously cautioned “To Sell” during the early stages of the surge, expecting prices to plummet.
However, the actual results turned out otherwise. As a result, the patronage from the markets sent Elon Musk to become the world’s richest man alive.
Similarly, the electric vehicle maker is now the fifth most valuable US company with a market cap topping $800 billion.
In response, the founder defended its skyrocketing share prices and market cap saying that the firm’s sources of income are more sustainable than it looks.
Generating revenue from both car sales and technology offerings, allowing it to generate greater profit in every unit sold.
- Trading Instrument