VLKAF

Tesla’s Margins, Free Cash Flow Swell in Third Quarter

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Image: Tesla has returned to a free cash flow rich entity. By Brian Nelson, CFA Tesla (TSLA) reported solid third quarter earnings on October 23. Total revenues increased 8%, while gross profit increased 20% in the quarter, as gross margins expanded nearly 200 basis points. Income from operations was up 54% thanks to more than a 320 basis-point improvement in its operating margin. Adjusted EBITDA advanced 24% in the quarter on a year-over-year basis thanks to a 240 basis-point improvement in its EBITDA margin. Non-GAAP net income increased 8% year-over-year, while non-GAAP diluted earnings per share increased 9% year-over-year. Tesla’s total production was 469,796 in the quarter, up 9%, while total deliveries increased 6%, both on a year-over-year basis. Management … Read more

Tesla’s Deliveries Bounce Back in Second Quarter

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Source: Tesla By Brian Nelson, CFA On July 2, Tesla (TSLA) released its production and delivery numbers for the second quarter of 2024. Production of Model 3/Y and other models totaled 410,831, while total deliveries came in at 443,956 units, consisting of 422,405 Model 3/Y and the balance coming from other models. The results were better than expected and helped to propel shares of the electric-vehicle maker higher. Tesla’s equity has shot up past the high end of our fair value estimate range, and while we liked the better-than-feared news regarding its deliveries, we continue to be on the sidelines with respect to Tesla’s shares. The next big catalysts for Tesla’s shares are its earnings release on July 23 and … Read more

Should You Gear Up for the Porsche AG IPO?

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Image Shown: Unit sales at Porsche fell 5% during the first half of 2022, but demand remains particularly strong for its SUV models despite a troubled supply chain and higher input cost inflation. Image Source: Porsche AG. By Brian Nelson, CFA German luxury and sports car maker Porsche AG (POAHY) (POAHF) is planning to go public in the coming weeks, following in the footsteps of Ferrari (RACE), which listed a few years ago. Porsche-owner Volkswagen AG (VWAGY) (VLKAF) has been investing heavily in electric vehicles, and the IPO of the Porsche brand will provide it with fresh capital to be more competitive on that front. The Porsche AG IPO would be one of the biggest ever in Europe at a time when … Read more

Big Changes in the Auto Industry as Chip Shortages, Supply Chain Issues, and Rising Input Costs Complicate Matters; Tesla and Ferrari Our Two Favorite Names

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Image: Ferrari’s fundamental momentum has been strong of late. Image Source: Ferrari N.V. 2022 Globe Newswire By Brian Nelson, CFA The auto industry perhaps has changed more than any other industry the past five years. First, it was Ford (F) that said it wouldn’t make passenger cars anymore, except for its iconic Mustang. Then, the European Union said that it would eventually end the internal combustion engine (ICE) by 2035. Then, Tesla (TSLA) reached over $1,200 per share and over a $1 trillion market capitalization. Can you imagine a world where Ford is not making sedans, the once modern-marvel of the internal combustion engine is dying, and where one car maker is worth as much as the next nine car … Read more

Net Cash Rich Tesla Reports Solid Free Cash Flow, Closes Out 2021 on a High Note

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Image Shown: A look at Tesla Inc’s new ‘Gigafactory’ manufacturing facility in Austin, Texas, that is currently under development. Image Source: Tesla Inc – Fourth Quarter of 2021 IR Shareholder Deck By Callum Turcan On January 26, Tesla Inc (TSLA) reported that it had produced ~306,000 vehicles and delivered ~309,000 vehicles during the final quarter of 2021. The electric vehicle (‘EV’) and battery maker beat both consensus top- and bottom-line estimates in the fourth quarter as it continued to successfully ramp its production capabilities. We plan to fine-tune our cash flow valuation model covering Tesla to take its latest earnings report into account, but we still expect the point fair value estimate to be below where shares are trading at … Read more

Tesla Scaling Up Nicely

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Image Shown: Tesla Inc is steadily working towards bringing another manufacturing facility online in the US, this time near Austin, Texas. Image Source: Tesla Inc – Shareholder Letter Covering the First Quarter of 2021 By Callum Turcan Electric vehicle (‘EV’) giant Tesla Inc (TSLA) continues to impress as it smashed past consensus top- and bottom-line estimates when it reported first quarter 2021 earnings on April 26. The company delivered 184,800 vehicles (182,780 Model 3/Y variants and 2,020 Model S/X variants) and produced 180,338 vehicles in the first quarter of this year, though we note that Tesla only produced Model 3/Y variants last quarter and Model S/X vehicle deliveries were met via its inventory. In the first quarter of 2021, Tesla’s … Read more

General Motors Makes a Deal with Nikola

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Image Shown: On September 8, shares of General Motors Corporation (in orange) and Nikola Corporation (in blue) jumped higher during normal trading hours after announcing their strategic partnership. By Callum Turcan On September 8, General Motors Corporation (GM) and Nikola Corporation (NKLA) announced a strategic partnership that saw shares of GM and NKLA leap up 8% and 41% during regular trading hours that day, respectively. General Motors will receive an 11% equity stake in Nikola (via common stock issuance) worth ~$2 billion in return for agreeing to provide Nikola in-kind services as “General Motors will engineer, homologate, validate and manufacture the Nikola Badger battery electric and fuel cell versions” which involves utilizing General Motors’ “Ultium battery system and Hydrotec fuel … Read more

Tesla Surges on Promising Production Report

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Image Shown: Shares of Tesla Inc have more than tripled year-to-date, as of this writing, due to growing optimism about the electric vehicle and battery maker’s long-term growth outlook. By Callum Turcan On July 2, Tesla Inc (TSLA) provided an update on the number of electric vehicles it produced and delivered during the second quarter of 2020, when its domestic manufacturing capabilities were hit the hardest by the ongoing coronavirus (‘COVID-19’) pandemic. This report likely acted as the catalyst for the latest run up in shares of TSLA as its technicals have “gone parabolic” of late. Production Update During the second quarter of this year, Tesla reported that it produced ~82,300 vehicles (including ~6,300 of the more expensive Model S/X … Read more

Data from Visa Indicates the Economic Outlook is Improving

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Image Shown: Visa Inc reports that US processed transactions volumes across its payment processing network improved materially on a year-over-year basis in May, relatively speaking, versus the downturn seen in the second half of March and the first half of April. Image Source: Visa Inc – 8-K SEC Filing By Callum Turcan One of our favorite secular growth industry tailwinds is happening in the payment processing, payment solutions, and financial technology space. The world is shifting toward a “cashless” society, and that has accelerated due to the ongoing coronavirus (‘COVID-19’) pandemic, in part due to the rise of e-commerce and in part due to the preference of many consumers to use contactless payment options when in physical stores. Visa Inc … Read more

Nikola Corp Shares Skyrocket After Getting Listed

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Image Shown: Shares of Nikola Corporation have skyrocketed since completing a business combination with a special purpose acquisition company in early-June 2020. By Callum Turcan Nikola Corporation (NKLA) completed its business combination with VectoIQ Acquisition Corp (a special purpose acquisition company or ‘SPAC’) on June 3, 2020, and a day later shares started trading under the NKLA ticker (VectolQ Acquisition previously traded under the ticker VTIQ). Effectively, this allowed Nikola Corp to become publicly traded without undergoing a “conventional” initial public offering (‘IPO’) and furthermore, the combination raised over $700 million to fund Nikola Corp’s ambitions. VectolQ Acquisition was sponsored by VectoIQ Holdings LLC, P. Schoenfeld Asset Management LP, and Cowen. Nikola Corp is run by CEO Mark Russell and … Read more