Tesla Motors (TSLA 314.76, -11.33, -3.47%) will report fourth quarter
production and delivery metrics sometime next week.
Last quarter, Model 3 production grew 86% sequentially to over 53,000 vehicles, in-line with guidance. Deliveries grew 203% sequentially to over 55,000 vehicles. The Model 3 became the best-selling car in the US in terms of revenue and the fifth best-selling car in terms of volume.
What's more, Tesla turned a surprise profit in the third quarter. Chief Executive Elon Musk had predicted profitability but very few expected that to happen as losses had been growing in recent quarters.
Tesla started making all-wheel drive Model 3s during the third quarter but the company was still able to stabilize its production system and reduce unit labor hours 30% sequentially. Tesla said that it will see further cost efficiencies going forward as production steadily ramps.
Tesla unveiled a lower cost Model 3 in October and a $35K may be available next year. Model 3 deliveries to Europe are supposed to start in February. If demand for the Model 3 is anything like the Model S has been, Tesla should be able to report some impressive growth going forward.
Yesterday, the stock rose 10% after Wedbush was out positive on the stock. Two weeks ago, the firm initiated coverage with an Outperform rating and $440 price target, noting that they believe "Tesla has a golden opportunity to ramp Model 3 unit sales in 2019 and beyond and thus translate into massive FCF and profitability as we look out into 2022-2030."
On the third quarter conference call in late October, Elon Musk said Tesla has the most exciting product road map of any company on earth, by far. The company is targeting solar roof tile production next year and Model Y (crossover EV) volume production in 2020. Tesla also has plans for a semi-truck, a roadster, and a pickup truck.
Still, skeptics remain as bears point to instability with Elon Musk, potential Model 3 quality concerns, lingering DOJ/SEC investigations and a less than stellar balance sheet.
However, another quarter like the last one will further quiet bear theses which have evolved over time.
Tesla's $54 bln market capitalization is the largest among US automakers. More than 20% of the nearly 130 mln share float is sold short. Near $300/share, the stock is trading toward the middle of its two-year range.
Tesla's enterprise value is ~30x EBITDA or ~16x EBITDA estimates for next year. Ferrari (RACE) trades at ~14x 2019 EV/EBITDA, Ford (F) trades at ~13x 2019 EV/EBITDA and General Motors (GM) trades at less than 7x EV/EBITDA. However, EBITDA is expected to fall next year at both Ford and General Motors.