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Tesla (TSLA) stock drops as Q4 2020 earnings results on EPS miss

Tesla just dropped it's Q4 2020 earnings results. Let's take a look.

Josh Hawkins

January 27, 2021 1:25 PM

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Tesla just released it’s Q4 2020 earnings report, resulting in an after-hours price drop on the stock market following a miss on the company’s estimated earnings-per-share (EPS). Despite not hitting the EPS for Q4 of 2020, Tesla did manage to end the quarter with a higher revenue of $10.7B compared to its estimated $10.1B. The report also brought news that Tesla would be refreshing the Model S (originally released in 2012) and the Model X.

Tesla’s Q4 2020 Earnings Release

The following is pulled directly from Tesla's Q4 2020 earnings release:

Highlights

• Cash
  • Operating cash flow less capex (free cash flow) of $2.8B in 2020
  • $4.9B increase in our cash and cash equivalents in Q4 to $19.4B
  • Free cash flow $1.9B in Q4
• Profitability
  • $721M GAAP net income; $2.5B non-GAAP net income in 2020
  • $270M GAAP net income; $903M non-GAAP net income (ex-SBC*) in Q4
  • $575M GAAP operating income; 5.4% operating margin in Q4
  • SBC expense increased to $633M in Q4
• Operations
  • Half a million vehicles produced and delivered in 2020
  • Model Y production at Gigafactory Shanghai started in December 2020
  • Updated Model S and Model X launched in January 2021

Summary

This past year was transformative for Tesla. Despite unforeseen global challenges, we outpaced many trends seen elsewhere in the industry as we significantly increased volumes, profitability and cash generation.

For the full year 2020, we achieved an industry-leading1 6.3% operating margin (despite an increase of SBC to $1.7B). Teams across our organization, including supply chain, manufacturing, logistics and delivery, rose to the occasion to ensure strong execution.

In addition, we continued to improve our products and make progress on our long-term roadmap. We ramped Model 3 in China to over 5,000 cars per week and started production of Model Y at Gigafactory Shanghai less than a year after breaking ground on the expansion. We also launched and ramped Model Y in Fremont in 2020.

In Berlin and Austin, we remain on track to start vehicle production this year with structural batteries leveraging in-house battery cells. Our engineering team has made significant progress on Full Self Driving

(FSD) software, with a limited release to customers. Finally, we are excited to ramp the updated Model S and Model X and deliver our first Tesla Semi by the end of the year.

While 2020 was a critical year for Tesla, we believe that 2021 will be even more important. Thank you for your trust and support and for being on this journey with us.

Outlook

• Introduction
  • Given the number of significant projects in the pipeline, we have simplified our approach to guidance for 2021, enabling our teams to remain focused on achieving our long-term goals.
• Volume
  • We are planning to grow our manufacturing capacity as quickly as possible. Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In some years we may grow faster, which we expect to be the case in 2021.
  • The rate of growth will depend on our equipment capacity, operational efficiency and capacity and stability of the supply chain.
• Cash
  • We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses.
• Profit
  • We expect our operating margin will continue to grow over time, continuing to reach industry-leading levels with capacity expansion and localization plans underway.
• Product
  • We are currently building Model Y capacity at Gigafactory Berlin and Gigafactory Texas and remain on track to start deliveries from each location in 2021. Gigafactory Shanghai will continue to expand further through the course of the year. Tesla Semi deliveries will also begin in 2021.

Check out the full press release on the official Tesla Investors Relations website for more info.

It's neat to see Tesla going back to the Model S and Model X to refresh them, and we're intrigued to see how people will react to the changes. For more earnings results from other companies, make sure you check out our video game and tech companies Q1 2021 earnings release schedule.

Josh Hawkins

Guides Editor

Joshua holds a Bachelor of Fine Arts in Creative Writing and has been exploring the world of video games for as long as he can remember. He enjoys everything from large-scale RPGs to small, bite-size indie gems and everything in between.