TSLA

Tesla Is Converging to Our Estimate of Its Intrinsic Value

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On Wednesday, Tesla (TSLA) reported in-line third-quarter results that showed record levels of Model S production, deliveries, and vehicle gross margin in the calendar quarter. The freshly-minted electric automaker generated positive free cash flow in the period ($26 million) and put up its third consecutive quarter of non-GAAP net income. The firm is now producing 550 cars per week, and Tesla plans to continue to increase production over the next several quarters to keep up with demand expansion. Tesla’s non-GAAP automotive gross margin (excluding zero emission vehicle credits) rose to 21% from 14% last quarter, as the firm was able to extract cost reductions and improve average pricing thanks to a greater mix of highly-optioned European deliveries and ones with … Read more

Ford Once Again Leads the Pack with September Sales

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September auto sales once again revealed a strong US auto market that continues to capitalize on pent-up demand. Though the seasonally adjusted annual rate (SAAR) fell from its 16 million-unit rate in August to 15.3 million units in September, the sequential decline seems mostly attributable to a timing shift (there were two fewer selling days in September than a year ago), and we’re not reading too much into the perceived modest industry-wide slowdown. As we can see from the chart below, there is plenty of volatility in the numbers from month to month, something that investors should continue to expect. Source: NADA Ford Best Ideas Newsletter portfolio holding Ford (click ticker for report: ) exceeded consensus estimates calling for flat … Read more

US Auto Market Shows Resolve in August; Ford Remains Our Best Idea; C-Max Outselling Tesla’s Model S

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During the past two years, we’ve never wavered on our bullish take on the domestic automotive sector—pent-up demand, inexpensive credit, and a rapidly age fleet have all combined to propel a robust automotive comeback. August was no different, with the SAAR topping 16.1 million units during the month. Let’s take a look at how some of the auto makers performed. Ford Best Ideas Newsletter portfolio holding Ford (click ticker for report: ) posted fabulous August sales results as unit sales surged 12.2% year-over-year to 221,270 units. Retail sales were up 20% year-over-year, and Ford could hardly produce enough vehicles to meet demand, adding 1,400 workers at its Flat Rock Assembly. F-Series sales continued to lead the way, with unit sales … Read more

Tesla: The Electric Engine That Could

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Electric carmaker Tesla (click ticker for report: ) zoomed past the Street’s expectations when it reported second quarter results Wednesday afternoon. Revenue exceeded consensus estimates, growing 14-fold year-over-year to $405 million. Adjusted earnings per share swung to a profit of $0.20, well above the loss expected from consensus expectations. The firm wasn’t free cash flow positive like it was in the previous quarter, but CEO Elon Musk noted that the negative operating cash flow was mainly a timing issue as several ZEV credits sat in receivables. Demand Is Robust We had no doubt about the strong demand for Tesla’s vehicles–the surprise during the quarter was to see the superb execution from the EV maker. Tesla was producing 400 vehicles per … Read more

Tesla’s Growth Is Exciting

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Electric vehicle maker Tesla (click ticker for report: ) continues to be one of the more interesting stories in the broader stock market. Without spending a dime on marketing, the firm posted record revenue of $562 million, smashing consensus estimates. Earnings per share turned positive at $0.12, which was also far better than consensus expectations. To top it off, Tesla posted positive free cash flow of $6.3 million—not much, but certainly a step in the right direction. During the first quarter, the company produced over 5,000 cars and recognized revenue on 4,900 units, easily exceeding the company’s initial guidance of 4,500 units. Demand remains brisk, and CEO Elon Musk noted in his letter to investors that current order demand is … Read more

March Auto Roundup

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March was another strong month of auto sales in the United States. The SAAR for the month of March came in at 15.27 million units, up from 14.14 million units in March of 2012. Let’s take a look at the results by OEM. Ford Best Ideas Newsletter holding Ford (click ticker for report: ) posted unit sales growth of 6%, driven by utilities (up 14%) and trucks (up 6%). Car sales were flat during the month, though we saw a solid increase of 6% for the redesigned Fusion, and we saw Police Interceptor sales ramp significantly with sales coming in at just under 1,000 units. Consumers flocked away from crossovers, dumping the Edge (down 13%) and the Flex (down 35%), … Read more

Tesla’s Aggressive Financing: Revolutionary or Shortsighted?

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Electric vehicle maker Tesla (click ticker for report: ) stole headlines over the past several days. The firm announced that it will be profitable on both a GAAP and non-GAAP basis as its first quarter sales exceeded expectations (4,750 units versus 4,500 units estimate). Tesla also cancelled its 40 kWh battery version, which is positive, in our view, because it will raise the firm’s average selling price, likely boosting margins. We were a bit surprised to see the company have software limit the driving range to 40kWh rather than force consumers to upgrade to 60kWh batteries, but we think the decision could positively impact brand perception. More importantly, Tesla revealed what it’s calling a “revolutionary” financing plan. Tesla has partnered with … Read more

Demand for the Model S Looks Solid But Will Tesla Live Up to the Hype?

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Electric vehicle maker Tesla (click ticker for report: ) announced fourth quarter results Wednesday afternoon that showed progress toward achieving breakeven. Revenue surged nearly 700% year-over-year to $306 million, exceeding consensus estimates. Tesla’s non-GAAP loss of $0.65 per share was worse than expected, and that loss balloons to $0.79 per share on a GAAP basis. The firm also burned through $101 million of cash, which was better than the prior quarter by about $60 million (but worse than the year-ago quarter by $20 million). Though it isn’t abnormal for a fast-growing company like Tesla to have a cash burn, we’d like to see the company at least breakeven with respect to operating cash flow, which it believes it can do … Read more

How to Think About Corporate Tax Reform

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US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill

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Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust (SPY). President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27. By Callum Turcan On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus … Read more