Tesla Motors Is Doing the Impossible
Tesla Motors Inc (NASDAQ:TSLA) stock is going crazy Thursday morning after the company reported first-quarter results.
Losses are narrowing. The company beat analysts’ expectations on most of the headline numbers, but only when you dig deeper into the company’s report can you really appreciate the great story at this electric car manufacturer.
Here are five incredible numbers from Tesla’s first-quarter results:
1. $1.6 Billion in Revenue
Every Tesla division knocked it out of the park last quarter. Net orders for the “Model S” rose 45% compared to a year ago. “Model X” production increased five-fold quarter-over-quarter. Even the company’s energy storage business is beginning to take off, delivering more than 2,500 “Powerwalls” and nearly 100 “Powerpacks” during the quarter. (Source: “Tesla First Quarter 2016 Update,” Tesla Motors Inc Investor Relations, May 4, 2016.)
In total, Tesla reported non-GAAP revenue of $1.6 billion. This figure was in line with analysts’ estimates and up 45% year-over-year.
2. $14.0 Billion in Booked Sales
In the first week of taking deposits for the “Model 3,” Tesla received more than 325,000 reservations. This number was achieved in spite of the fact that the company spent no money on advertisements or paid endorsements.
This reservation figure implies $14.0 billion in booked sales, making the Model 3 the biggest consumer product launch ever. Any analysts who predicted all-electric vehicles would never find mass-market appeal are now munching on some humble pie.
3. 500,000 Vehicles by 2018
If Elon Musk was sitting at the proverbial poker table, he just went all in. In the company’s latest letter to shareholders, Tesla announced it was moving stepping up the timeline for its all-electric vehicles. The company now plans to deliver 500,000 cars per year by 2018, two years earlier than originally forecasted.
For context, Tesla delivered only 50,000 vehicles last year. In 2016, the company expects to roll out between 80,000 and 900,000 cars from its assembly lines. Musk’s new target will require the company to grow tenfold in only two years.
4. $2.0 Billion in Market Value
Shareholders were obviously impressed. Shares of TSLA stock surged as much as seven percent following the announcement. This added more than $2.0 billion to the company’s market capitalization.
In the hours following the announcement, however, investors started to calm down. Shares trimmed some of their gains, as analysts dug deeper into the quarterly results. Ahead of the opening bell on Thursday, shares of Tesla stock were only trading up about three percent.
5. $1.6 Billion Cash Burn
Tesla will have to spend a lot of money to hit that target. According to figures compiled by Bloomberg before Wednesday’s announcement, analysts were expecting the company to burn through $820 million of cash in 2016. Now, with the company ramping up its expansion, this figure grows to almost $1.6 billion. (Source: “Tesla’s Talk Isn’t Cheap,” Bloomberg, May 4, 2016.)
Tesla, though, has the financial resources to pull it off. The company’s cash balance at the end of the fourth quarter was $1.4 billion. If you include the $400 million it received in Model 3 deposits, Tesla’s war chest grows to $1.8 billion. And given the rich multiple for TSLA stock and easy access to lines of credit, Elon Musk should have no trouble raising funds if needed.