Tesla continues to skyrocket, surging to a new record high of almost USD800 per share as per the Q4 earnings report published on Monday, February 3, 2020. The report topped the expectations of a host of Wall Street analysts who recently predicting further upside for the stock. Despite record deliveries, gross and net profits both fell for Q4 YoY, the stock price has surged higher roughly 130% in the last 12 months. It is clear that the stock price has become completely disconnected from the company’s performance. It is all based on future expectations. Actual results are no longer a factor.
The stock price performance continues to be seemingly driven higher based purely on sentiment and buyer hysteria than on real information and measurable data projected forward. Reviewing Tesla’s quarterly update we find automotive revenue in Q4 2018 was USD 6.323 billion while Q4 2019 was USD 6.368 billion, up less than 1% YoY. All of the sales in 2019 came from the Fremont factory where the Tesla Q4 Update claims production can be increased to 490,000 units annually.
With tariffs placed on not only finished cars but automotive parts as well, Tesla believes in the logic for building the Shanghai plant. However, no one outside Tesla knows what is actually in the order bank, and Chinese competition continues to grow. The 2019 Chinese Model 3 sales were less than half the number of EU sales as per recent statistics. So as stated months ago, Tesla is still betting the farm on China.
While pushing the stock price to new all-time highs after the release of the Q3 and Q4 2019 results, investors and the press seemed most excited about Elon Musk’s prediction of 500,000+ sale in 2020. The problem is that there would only be a 36% increase in annual deliveries when they increased deliveries by over 49% in 2019. To equal the nearly 50% growth in sales from 2019, Tesla would need to deliver over 550,000 vehicles this year.