Tesla (TSLA) Q1 2020 results: Beats on revenue, Model Y sets historic profit on launch

Tesla’s (NASDAQ:TSLA) first-quarter earnings for 2020 saw the electric car maker post $5.985 billion in revenue, slightly beating estimates from Wall Street. The results, which were discussed at length in an Update Letter, were released after the closing bell on Wednesday, April 29.

Tesla ended the first quarter on a surprisingly optimistic note. Despite the ongoing pressures from the coronavirus outbreak, Tesla managed to deliver 88,400 vehicles and produce over 102,000, comprised of 76,200 Model 3 and Model Y and 12,200 Model S and X. 

Gigafactory Shanghai facility also reopened after a brief government-mandated shutdown in China due to the initial onset of the pandemic, and has since ramped its Model 3 production activities. Tesla stock has also proven resilient amidst the COVID-19 pandemic, rising 70% year to date. 

The following are the key points in Tesla’s Q1 2020 Update Letter.

REVENUE

Tesla reported revenue of $5.985 billion for the first quarter. In contrast, Wall St. expected Tesla to report revenue of $5.85 billion as per data aggregated by NASDAQ.

EARNINGS

Tesla shareholders saw non-GAAP earnings per share of $1.24 in the fourth quarter, beating Wall St’s estimates. In comparison, Wall Street expected Tesla to report a loss of $0.18 per share for the first quarter. 

CASH

Despite Q1 being a traditionally soft quarter as per automotive trends, Tesla was able to increase its cash by $1.8 billion. This hiked up the company’s total cash to around $8.1 billion, which is partly due to a $2.3 billion capital raise that was conducted in the first quarter. 

HIGHLIGHTS

• Operating cash flow less capex (free cash flow) negative $895M in Q1 (of which $981M outflow due to inventory growth)
• $283M GAAP operating income; 4.7% operating margin in Q1
• $16M GAAP net income; $227M non-GAAP net income (ex-SBC) in Q1
• Gross margin at Giga Shanghai approaching level of US-made Model 3
• Model Y gross margin positive in Q1
• Solar Roof production exceeded 4 MW per week, enough for up to 1,000 homes
• Tesla Semi deliveries are shifted to 2021

TESLA ENERGY

The first quarter saw milestones for Tesla Energy. Apart from Solar Roof production in Gigafactory New York exceeding 4 MW per week, which is enough for 1,000 homes. The 100,000th Tesla Powerwall has also been installed, highlighting the potential of residential battery storage. Demand for the 3 MW Tesla Megapack is also healthy, being beyond the company’s capability to produce the grid-scale systems. 

GIGAFACTORY SHANGHAI AND BERLIN

Tesla’s Gigafactory Shanghai is proving to be a trump card, with the facility poised to hit a production rate of 4,000 Model 3 per week in mid-2020. Tesla China is also poised to release two new versions of its locally-produced Model 3, the Long Range and Performance variants. 

Gigafactory Berlin-Brandenburg is also progressing. While no groundbreaking activities have been done on the site, Tesla was nonetheless able to complete its ground-leveling operations. Despite this, Tesla still aims to start Model Y production in Gigafactory Berlin in 2021. 

TSLA STOCK SO FAR

Investors proved bullish on the electric car maker on Wednesday, ending the day +4.08% and trading at $800.51 per share. Tesla shareholders have received the electric car maker’s results positively. As of writing, Tesla shares are trading 9.06% at $873.00 per share during after-hours trading. 

Tesla’s Q1 2020 Update Letter could be accessed below.

Q1 2020 Update by Simon Alvarez on Scribd

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

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