Tesla Inc (NASDAQ: TSLA) stock fell 15% in the past year. The company had missed a lot of production targets in the past and also the CEO Elon Musk tweets attracted fines from the SEC. However, there are a few interesting points finally which investors need to be happy about.
The company recently announced that the standard Model 3 which will feature 220 miles of driving range with a top speed of 130 mph will be available at $35,000 before tax credits. The deliveries are expected to start within the next month. Model 3 Standard Range Plus which will have a driving range of 240 miles and a top speed of 140 mph will be available at $37,000 before tax credits. Model 3 was launched in Mexico on March 08, 2019.
Tesla also announced its plans to close its stores and was moving to global online-only sales strategy in order to save costs. Customers can use the car for one week or 1000 miles and return the car for a full refund if they are not satisfied. However, the company has provided a clarification that the company has temporarily put a freeze on the closing of the retail stores until the end of the month. The company will also have to negotiate the lease payments with the landlords.
Morgan Stanley Analyst Adam Jones says “While this may stabilize the air-pocket in Q1 sales, we’re concerned it’s a sign of a brand that may be, at the margin, losing its halo of exclusivity,” he writes. “We think the bears have more material to work with than bulls here,” he adds.
JMP Securities and Wedbush Securities are both out with positive notes, JMP notes that the dealership savings will make the $35K Model 3 feasible and Wedbush thinks the mass-market Model 3 is a game changer.
Tesla will also showcase Model Y on March 14 at an event at LA Design Studio. Tesla Model Y will be about 10% bigger than Model 3 and will cost about 10% more than Model 3 and will have slightly less range for the same battery.
The company released its fourth quarter results on January 30, 2019. Revenue for the fourth quarter grew 120% to $7.09 billion and it beat the median analyst revenue estimates by $138 million. Non-GAAP EPS came at $1.93 compared to -$3.04 for the same period last year. It missed the analyst EPS estimates by 27 cents.
Cash and cash equivalents at the end of the year was $3.7 billion, which increased by $718 million in the fourth quarter. The company has recently paid a $920 million convertible bond in cash. Capital expenditure including land acquisition in China was $2.24 billion in 2018. The 2019 projected capital expenditures are about $2.5 billion which will be used for Gigafactory in Shanghai, Model Y, Tesla Semi, and further expansion of supercharger. The Shanghai factory will be financed mainly through Chinese banks. It expects to deliver about 360,000 to 400,000 vehicles in 2019 a growth of 45% to 65%.
Conclusion: The Company is expected to make a profit this year and the cash flows are expected to improve. It is now trading at a forward P/E ratio of 30.54. Investors could keep a track on the company and buy at a slightly lower level. However, they need to remember that the stock has been volatile in the past.