Tesla Stock third quarter, 2020 earnings are out. The numbers show Tesla is on track to deliver half a million vehicles in 2020. The following are the main highlights:
- Five quarters of sequential profitability.
- Total revenue grew 39% YoY in Q3.
- Operating income improved in Q3 to a record level of $809M, resulting in a 9.2% operating margin.
- Quarter-end cash and cash equivalents increased by $5.9B QoQ to $14.5B, driven mainly by our recent capital raise of $5.0B (average price of this offering was ~$449/share) combined with free cash flow of $1.4B. This was a very smart strategy of raising capital in equity without adding debt. When the stock price is high, smart capital allocation dictates raising capital by issuing more stock. Since the investors are so exuberant, they hardly notice this dilution.
- Stock based compensation SBC expense in Q3 attributable to the 2018 CEO award is $290M. This was triggered by a significant increase in share price and market capitalization and a new operational milestone becoming probable.
- Fremont gigafactory producing 500,000 units per year.
- Shanghai gigafactory production capacity increased to 250,000 units. Model 3 is currently the lowest priced premium midsize sedan in China.
- Construction of the Gigafactory in Berlin continues to progress rapidly. Buildings are under construction and equipment move-in will start over the coming weeks. At the same time, the Giga Berlin team continues to grow. Production is expected to start in 2021.
The current crowd of SPAC merged Electric vehicle stocks are light years behind Tesla. Tesla is the leader of the EV stocks. The valuation is very high though, so a good strategy would be to wait until the market cools down. At that point, it would be good to initiate a position.