The latest Tesla earnings report followed the usual pattern: large losses today, but plenty of potential tomorrow.
The Messiah of the Motor Industry reported revenue of $1.21 billion for the 4th quarter of 2015, and $4.05 billion for the full year, both healthy increases over the previous periods.
Tesla delivered 17,478 vehicles in Q4, including 206 Model X. Model S deliveries increased 76% for the quarter, and the company reaffirmed its prediction of 60-80% sales growth in 2016. Model 3 will be “unveiled” March 31, and remains on schedule for production and deliveries in late 2017.
Automotive gross margin, which is the amount the company earns on each vehicle sold, remains fairly healthy at 19.2% (and the company expects to increase this as it continues to reduce production costs). This is one of the most important numbers reported (and one that’s subject to much misinformation in the anti-Tesla regions of the media). As long as Tesla is making money selling its vehicles, it can eventually become profitable if it can increase its volume (the gross margin figure does not include the $8 million that Tesla earned from selling California ZEV credits).
Tesla assures us that sales remain strong – new Model S orders grew over 35% year on year in Q4, with growth in all regions, and Model X reservations grew over 75%.
And now for the bad news: Net loss (on the industry-standard GAAP basis) was $2.44 per share for Q4, and $6.93 per share for the full year 2015. Tesla hopes to reverse the pattern of losses soon – it predicts a profit in Q4 2016.
Technically, this report was a negative surprise – analysts had expected a slight profit, but Tesla reported a loss. However, Tesla is not an ordinary company, and Wall Street does not react to its earnings reports in the ordinary way. Driven by skepticism about the pace of production, TSLA shares have lost over a quarter of their value in the last couple of weeks. Stock pundits called this earnings report “a mixed bag,” and it seems to have stopped the freefall. Whether the stock price will soon return to its former lofty level will surely depend on the three Ps: production, production and production.