Tesla's First Quarter Is an All-Time Company Record
We are increasing our Tesla fair value estimate to $354 from the time value of money adjustment in our model.
Tesla (TSLA) announced record quarterly results on April 26 with adjusted diluted EPS of $0.93 (Refinitiv consensus was $0.79) about four times larger year over year versus first-quarter 2020 and up 16.3% sequentially from fourth-quarter 2020. We are increasing our fair value estimate to $354 from the time value of money adjustment in our model. Revenue increased 74% year over year but fell 3.3% sequentially as combined Model S and Model X deliveries fell by 83% as the company transitions those vehicles to new generation models coming in second and third quarter, respectively. Total deliveries still were a record though thanks to 13.1% sequential growth in combined Model 3 and Model Y sales. We remain comfortable modeling total 2021 deliveries of 800,000 units as demand continues to be strong, the S and X should drive incremental growth later this year, and management talked about combating the semiconductor shortage by quickly finding new microcontrollers and developing new firmware for chips made by new suppliers. The call had no discussion of the shortage so it’s unclear if this mediation effort will last, but we sensed no apprehension from management on the call.
Free cash flow of $293 million fell significantly from fourth quarter’s $1.9 billion but was much better than the $895 million burn in first-quarter 2020. Compared with fourth quarter, working capital was essentially a nonfactor and capital expenditures rose 17% to $1.3 billion. Emission credit sales of $518 million grew 46% year over year and almost equaled pretax income of $533 million. Management maintained its high level guidance for 2021 deliveries in excess of the long-term goal of 50% annual growth and total capacity remains at 1.05 million units. Berlin and Texas plants remain due to open late this year which will increase this figure. We think the stock continues to trade on the chance Tesla becomes massively larger over time rather than on any single quarter’s results.
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David Whiston does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.