Analysts Expect Tesla’s Revenue Growth Rate to Fall in Q1 2019



Existing trend in Tesla’s revenue

In the fourth quarter of 2018, Tesla (TSLA) reported revenue of ~$7.2 billion on a GAAP (generally accepted accounting principles) basis. This figure reflected a 5.8% sequential rise and a 119.7% YoY (year-over-year) rise from $3.29 billion in the fourth quarter of 2017.

With this revenue, TSLA managed to surpass analysts’ fourth-quarter consensus revenue estimate of $7.08 billion. In the third quarter of 2018, the company’s YoY revenue growth rate was slightly higher at ~128.6%.

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In 2016, Tesla stopped reporting its non-GAAP (generally accepted accounting principles) financial data. The difference between GAAP and non-GAAP revenue is the result of the different treatment of lease accounting. GAAP mandates that lease revenue be recognized throughout the life of a lease. However, in a non-GAAP set of numbers, lease revenue is recognized up front.

Revenue growth rate to fall

Analysts’ estimates suggest that Tesla’s YoY revenue growth rate will fall further in the first quarter of 2019. These estimates suggest that Tesla is likely to report $5.3 billion in revenue in the first quarter. This expected revenue figure is up ~56.2% YoY and 56.2% sequentially.

In the second quarter of 2019, Tesla’s YoY revenue growth rate is expected to be 59.8%.

What could hurt Tesla’s revenue?

A significant sequential decline in Tesla’s car deliveries is likely to hurt its revenue growth in the first quarter.

Currently, Tesla delivers only three vehicles: the Model S, the Model X, and the Model 3. An increase in Model 3 deliveries has helped the company boost its revenue. Tesla’s vehicle line-up is quite small compared to the extensive product line-ups of legacy automakers (XLY) such as General Motors (GM), Ford Motor Company (F), and Toyota Motor (TM).


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