Why Tesla Fell ~5% despite Q4 Revenue Beat



Tesla’s Q4 earnings

On January 30 after the market closed, Tesla (TSLA) reported its fourth-quarter results. The company’s adjusted net earnings for the quarter were $1.93 per share on a non-GAAP (generally accepted accounting principles) basis. The fourth-quarter earnings were much worse than the company’s third-quarter adjusted EPS of $2.90 and analysts’ consensus estimates of $2.20.

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Model 3 gross margin remained above 20%

In the fourth quarter, Tesla’s Automotive segment’s revenues rose to $6.32 billion—compared to $6.10 billion in the previous quarter. After taking the company’s Energy and Services segment’s revenues into account, its fourth-quarter total revenues were $7.22 billion—compared to $6.82 billion in the third quarter.

Tesla’s total revenues were also better than analysts’ consensus estimate of $7.08 billion, which drove the optimism among investors. The stock rose more than 3% in after-market trading on January 30. At 4:23 PM EST, Tesla stock was trading at $298.00 in the after-market session—up 3.8% from its closing price on January 30. To add optimism, in the fourth-quarter earnings report, Tesla noted that its Model 3 gross margin remained stable at ~20% in the fourth quarter on a GAAP and non-GAAP basis.

During the fourth-quarter earnings call, Tesla announced CFO Deepak Ahuja’s retirement. The stock fell 4.5% in the after-hours trading session.

2019 Model 3 production outlook

Tesla expects to achieve Model 3 car production (XLY) at a rate of 7,000 units per week by the end of 2019. The petition reflected management’s confidence in Tesla’s ability to sustain high-volume production.

On January 30 in the regular market session, Tesla settled with 3.8% day gains, while its Chinese (MCHI) peer NIO (NIO) rose 7.5%.


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