Markets

Tesla (TSLA) Q4 Loss Wider than Expected, Revenues Beat

A generic image of a stock chart
Credit: Shutterstock photo

Tesla Motors, Inc. 's TSLA adjusted loss was of $1.25 per share in the fourth quarter of 2016, compared with a loss of $2.44 in the year-ago quarter. However, the loss was wider than the Zacks Consensus Estimate of a loss of $1.19.

Revenues surged 88% year over year to $2,284.6 million in the reported quarter, surpassing the Zacks Consensus Estimate of $2,200.7 million.

Tesla delivered 22,252 cars in the reported quarter, down 10% from the third quarter but up 27% year over year. The company received record orders for Model S and Model X combined, up 49% year over year. Additionally, 6,450 vehicles were in transit to customers, slated to be delivered in the first quarter of 2017. The company manufactured 24,882 vehicles in the fourth quarter, down 1% from the third quarter but up 77% year on year.

Revenues from Automotive sales rose to $2 billion in the quarter from $1.12 billion a year ago.

Energy generation and storage revenues surged from $11.5 million in the fourth quarter of 2015 to $131.4 million in the reported quarter.

Services and Other revenues surged 85% to $159.1 million from $85.9 million in the year-ago quarter.

Tesla's fourth-quarter 2016 gross margin was 19.1%. Adjusted automotive gross margin was 22.2% in the quarter, down 280 basis points from the third quarter due to unfavorable gross profit impact, lack of new Autopilot-related revenues, currency headwinds and a sequential rise in fixed asset dispositions.

Energy generation and storage gross margin rose 680 basis points sequentially, to 2.7% in the quarter. However, the margin was lower than expected as the company concentrated on production capacity for energy storage products to aide future growth. In the quarter, service and other gross margin fell 1,610 basis points sequentially to negative 11.3% as the company ramped up its service capability ahead of the Model 3 launch.

Tesla Motors, Inc. Price, Consensus and EPS Surprise

Tesla Motors, Inc. Price, Consensus and EPS Surprise | Tesla Motors, Inc. Quote

Full-Year 2016

For full-year 2016, Tesla's adjusted loss was $5.19 per share, compared with a loss of $6.93 reported in 2015. The loss was wider than the Zacks Consensus Estimate of a loss of $4.73.

Revenues for the year came in at $7 billion, up from the $4.05 billion recorded in 2015. The figure narrowly beat the Zacks Consensus Estimate of $6.9 billion.

Financial Position

Tesla had cash and cash equivalents of $3.39 billion as of Dec 31, 2016, compared with $1.20 billion as of Dec 31, 2015. Long-term debt totaled $7.15 billion as of Dec 31, 2016, compared with $2.65 billion as of Dec 31, 2015.

Cash used in operating activities amounted to $123.8 million in 2016, compared with outflows of $524.5 million a year ago. Capital expenditures decreased to $1.28 billion from $1.63 billion in 2015.

Tesla added three new lender commitments in its credit facility, increasing its borrowing capacity in fourth quarter of 2016 with an additional $500 million. The company had $1.38 billion undrawn against these commitments as of the end of 2016.

Business Expansion

Tesla is expanding its vehicle charging network. At the end of the fourth quarter, the company had 790 Supercharger locations globally, with 5,043 individual chargers. The company aims to double its Supercharger locations in North America in 2017. To supplement the Superchargers, 4,148 destination chargers with 7,110 connection points were available globally at the end of the fourth quarter. These chargers offer easy charging at hotels, malls as well as restaurants. The company ended the quarter with 265 stores and service centre locations globally.

Tesla completed the acquisition of SolarCity in the fourth quarter of 2016 and Grohmann Engineering in Jan 2017. In the fourth quarter, the company also deployed its new Autopilot hardware platform on both Model S and Model X. The advanced technology is expected to help Tesla collect more data for autonomous driving than any other company.

In Feb 2017, Tesla opened a new 168,000 square foot vehicle delivery centre in Hong Kong. The company also expects to finalize the locations of Gigafactories 3, 4 and perhaps 5 later this year.

Model 3 Update

Tesla has completed crash tests for Model 3 with positive results. The company is on track to begin limited vehicle production in Jul 2017. The company aims to steadily increase production to exceed 5,000 units per week in the fourth quarter of 2017 and 10,000 vehicles per week in 2018. Manufacturing equipment for Model 3 is under installation at Fremont and at Gigafactory 1 where the battery cells for energy storage products, which will have the same form-factor as the cells to be used in Model 3, are already under production.

Outlook

Tesla expects to see advancement in its transport, energy generation and storage product lines.

Tesla targets 47,000−50,000 vehicle deliveries in the first half of 2017, representing a 61−71% growth year over year. Moreover, in first quarter 2017, the company expects automotive gross margin to improve to the third quarter of 2016 level and continue to expand in the second quarter of 2017.

Tesla is also focused on profitability and cash preservation in the energy generation and storage business. The company remains on track to generate $500 million cash by 2019 and achieve the expected synergies from the acquisition of SolarCity. The company intends to cut down on customer acquisition costs.

Tesla expects capital expenditure between $2−$2.5 billion prior to the commencement of the Model 3 production. The company is also focused on capital efficiency while also investing in the production of battery cell, pack and energy storage at Gigafactory 1.

Price Performance

Tesla has outperformed the Zacks categorized Auto Manufacturers-Domestic industry over the past three months, with the company gaining 45.8% while the industry witnessed a gain of 16.3% over the same period.

Zacks Rank & Key Picks

Currently, Tesla carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the auto space include Spartan Motors Inc. SPAR , American Axle & Manufacturing Holdings, Inc. AXL and Ferrari N.V. RACE . All the three stocks sport a Zacks Rank #1 (Strong Buy).

Spartan Motor has long-term expected growth rate of 15%. You can see the complete list of today's Zacks #1 Rank stocks here.

American Axle has long-term expected growth rate of 8.07%.

Ferrari has long-term expected growth rate of 15.15%.

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?

Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Tesla Motors, Inc. (TSLA): Free Stock Analysis Report

American Axle & Manufacturing Holdings, Inc. (AXL): Free Stock Analysis Report

Spartan Motors, Inc. (SPAR): Free Stock Analysis Report

Ferrari N.V. (RACE): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

RACE AXL TSLA SPAR

Other Topics

Stocks

Latest Markets Videos