TSLA Stock Quarterly Report
Few companies get investors as divided as Tesla Inc (NASDAQ:TSLA). From its lofty promises to its controversial CEO Elon Musk (reviled as a snake oil salesman by his detractors and celebrated as a visionary genius by his supporters), bringing up the topic of Tesla can quickly divide a room.
With all that in mind, supporters of the electric vehicle company got a huge shot in the arm with the latest Tesla stock quarterly report in October.
Is this just the start of gains for TSLA stock, or are the haters correct?
In my mind, Tesla will likely be very profitable for investors for a number of reasons, but let’s start with what happened to it in 2019.
Chart courtesy of StockCharts.com
As seen in the above chart, Tesla shares have not had the most impressive 2019. They started the year with a massive fall, losing more than 45% in value.
But then things started to turn around in the summer when TSLA stock surged back, culminating in the Tesla stock quarterly report in October that sent shares skyrocketing by 20% in a single day.
The reason for the drop earlier in the year was, as always, the company not living up to expectations. The stock’s biggest plunge came in July when the company released a weak quarterly report and lost its Chief Technology Officer JB Straubel.
Tesla Inc saw its production costs rise, thereby hurting profit margins and otherwise sending investors running for the hills.
But in this case, it was darkest before the dawn. Tesla shares quickly bounced back from this nadir and they have been a roaring success since then, gaining back virtually all of the losses since the beginning of the year.
The Tesla stock quarterly report for Q3 was the culmination of that run. It showed the company increasing its cash balance to $5.3 billion and reported a profit of $1.86 per share, a massive rebuke to the analyst expectations for a loss of $0.42 per share. (Source: “Tesla shares soar 21% as surprise profit answers skeptics,” Reuters, October 23, 2019.)
This came as much-needed relief for the beleaguered company. Its gross margins were above expectations as well, and the company said it was “highly confident” that it would surpass the low end of its yearly global vehicle delivery goal, an extremely important milestone for the company.
Tesla Inc continues to expand globally as well, with a new factory opening in Shanghai. It’s also looking to roll out its “Model Y” sport utility vehicle in 2020. In both cases, word is that the company is ahead of schedule, a promising sign for the future of TSLA stock.
The “Model 3,” Tesla’s most affordable model to date, is still very fresh in 2019, having been released in 2018. While sales have been strong, the company needs to improve upon them if it plans to be perennially profitable.
But as the automaker continues to expand globally, with a new “Gigafactory” in Europe, it has to keep costs down in order to impress investors. Tesla’s Q3 report showed that it was able to cut costs 16% on a yearly basis, pointing to efficiency improvements and reductions in manufacturing and material costs.
The company projects that the Model Y will achieve higher margins than the Model 3, with production costs being roughly similar.
The company also forecasts that it will be generally cash-flow-positive and self-funding as it moves ahead.
And, of course, Tesla and Musk are never ones to sit on their laurels: the second they have the resources and time, they’re looking toward the next tech revolution that it can spearhead.
“For about a year and a half we stripped Tesla energy of resources,” said Musk. (Source: Ibid.)
“Now that Model 3 production is in a good place and headed to a great place we have restored resources to Tesla storage and solar. That’s going to be really crazy growth.”
Musk further stated that he is not opposed to selling batteries and other parts to competitors.
So we have the groundwork laid for a very strong resurgence of Tesla stock in 2020 if the company can translate its quarterly report success into sustainable gains.
It should be noted, the company has been in this position before. Last year, it similarly smashed expectations, sparking a 31% run in its shares, until 2019’s various setbacks came in and put a damper on TSLA stock.
But, all things considered, I believe that Tesla shares have a lot of potential for investors to make a solid profit off the company in 2020, both by playing long and by playing short.
Tesla Stock Prediction for 2020
With 2020 fast approaching and Tesla looking to end the year on a high, it makes sense to look ahead with our Tesla stock prediction for 2020.
As mentioned above, one great quarterly report does not a strong stock make. We’ve seen this before with TSLA stock specifically, wherein gains were impressive but ephemeral. While that may be the case here as well, there’s a lot to be excited about because Tesla Inc is looking to right a lot of wrongs in 2020.
First of all, 2019 had a number of manufactured issues. Musk is famous and a luminary, but he’s also a magnet for bad press.
From attacking one of the divers who worked to free trapped boys in a cave, to smoking weed on a podcast, to getting into tussles with the U.S. Securities and Exchange Commission (SEC), Musk has been both a bane and a boon for Tesla as time has gone on.
There would be no powerful Tesla like the one we have today without Musk, but there would be lot fewer headaches for shareholders if the man could simply keep his mouth shut from time to time.
Hopefully Musk has learned his lessons and 2020 will show a more mature CEO. If that’s the case, Tesla stock investors can expect fewer unwelcome surprises.
Another way TSLA stock can help turn things around in a sustainable way is with the coming U.S. presidential election.
While the company has no direct impact on the outcome of the race, it’s safe to say that if a Democrat is sitting in the White House after the 2020 election, many of the subsidies that have been curbed or outright stopped at the federal level could be restored (with potentially new ones on the way).
Such subsidies would likely see an increase in sales and a decrease in production costs, meaning higher profits and higher share value.
While the U.S. presidential election will likely have no tangible impact on the company until late 2020 or early 2021, the prospect that going long on Tesla stock can pay off in a big way is real, considering all the potential boons that could be headed its way.
Another point is that, while we often forget, Tesla Inc is more than just an electric vehicle company. It’s more apt to say that it’s an energy company, tech company, and car company all rolled up into one.
Tesla is focused on sustainable energy (a hot-button topic these days), with the third version of its solar roof tile on the way.
If the company can make meaningful expansions into the energy market, it could radically expand its revenue sources and, again, increase its profitability and share-price growth.
And Tesla is not only looking at the energy sector as a means to innovate. Don’t forget that the company is among the vanguard when it comes to autonomous vehicles.
Tesla is keen to get self-driving cars on the road, and if it’s successful in being the first company to accomplish this feat, expect to see TSLA stock skyrocket.
So the long-term Tesla stock prediction for 2020 looks strong. But, as I mentioned earlier, short-term investors could similarly see strong gains from Tesla stock in 2020.
While I am confident in the long-term growth of the company, I’m equally confident that hiccups await it. And seeing as how Tesla is a lightning rod for investor doomsayers, I anticipate that its stock will see its fair share of setbacks.
Short sellers able to play the dip could see big gains. On top of that, buying at the nadir of a Tesla stock drop (as some did in July) can score massive benefits to an investment portfolio.
The future of TSLA stock is very strong, even if there may be a few problems here and there. While the stock is still relatively unpredictable and volatile, I’ve been bullish on Tesla for a long while now (and continue to be).
I’ve covered Tesla Inc for about three years now, and it’s seen a share-price gain of 64% in that time. I have been bullish since day one, and while there have been ups and downs for Tesla stock since then, I have always said that the future of Tesla is very bright if even one of its moonshot ideas comes through.
While we still may be a few years away from a true Tesla revolution, there are more than enough ways for Tesla shares to rack up big gains in the near future.