Tesla’s Growth Engine Is Running on All Cylinders

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Somewhere out there, some skittish investors are kicking themselves for selling Tesla Motors (NASDAQ:TSLA) on Thursday. Shares of the electric automaker closed the regular trading session down 4.94 percent at $193.64, but the stock shot as much as 13 percent higher in post-market trading after the company reported fourth-quarter and full-year results that were better-than-expected.

Tesla delivered a record 6,892 Model S vehicles in the fourth-quarter, pulling in revenue of $610.85 million. Combined with development services revenue of $4.37 million, GAAP fourth-quarter revenue doubled to $615.22 million. Non-GAAP revenue of $761.34 million, which includes $146.13 million in Model S revenue deferred due to lease accounting, beating the consensus estimate of $686 million. Adjusted earnings came in at 33 cents per diluted share, beating the mean analyst estimate of 21 cents.

Tesla rounded out its strong quarter by reporting a gross automotive margin of 25.2 percent, beating its 25 percent target. The company closed the year with 22,477 vehicle sales for non-GAAP revenue of nearly $2.5 billion.

“As volume increases, additional economies of scale will come into play, resulting in further improvements in gross margin,” wrote Chair and CEO Elon Musk and CFO Deepak Ahuja in the company’s letter to shareholders. “We think an automotive gross margin of 28 percent, excluding potential ZEV credit sales, is a reasonable target for Q4 2014, even if a lower option take rate is assumed. Please note that Tesla is not trying to achieve the absolute highest possible gross margin, as this would require following the industry practice of charging excessive prices to customers in certain markets, which we believe is inconsistent with building long term loyalty.”

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