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Shares of the electric vehicle maker have reached all-time highs. It became the most valuable company ever added to the S&P 500 Index (SPX). And, with a little rounding, the company hit its promised goal of half a million deliveries.
Because investors tend to watch production and delivery figures closely, this is an important step Tesla Inc (NASDAQ: TSLA) said it delivered 180,570 vehicles in the last three months of 2020, bringing the total number of deliveries for the year to 499,550.
In January 2020, the company said deliveries are expected to “significantly exceed” this milestone. But investors can probably forgive TSLA for not technically hitting the 500,000 mark given the mad rush of 2020, when TSLA had to halt production in California and China due to the coronavirus.
In the run-up to TSLA’s fourth quarter earnings report and the post-close conference call on Wednesday, investors will likely want to hear more production details, especially after CNBC announced an 18-day planned shutdown of the lines. Model S and Model X in California. This might suggest that the company isn’t seeing as high a demand for these older lines as it is for newer models.
Shanghai Model Y production begins
Speaking of newer models, investors are probably eager to learn more about how the production of the Model Y is going in China. In the January press release announcing the latest production and delivery figures, TSLA also said production of its Model Y had started in Shanghai. The company said on Twitter Inc (NYSE: TWTR) that deliveries of the China-made vehicles began earlier this month.
China is an important market for Tesla. Upon its release in the third quarter, it had an installed capacity of 250,000 models 3 in its Shanghai plant. It might be interesting to see how much capacity he says is installed there for Model Y, assuming he publishes that data for Q4.
It has not been easy for TSLA in the Asian nation. In October, China’s State Administration for Market Regulation said TSLA was recalling more than 48,000 S and X models due to potential suspension issues. This month, a Model 3 reportedly caught fire in Shanghai, possibly after damaging its battery.
This is not the only headache related to TSLA security. Earlier this month, the U.S. National Highway Traffic Safety Administration asked the electric vehicle maker to recall around 158,000 S and X models due to touchscreen display issues.
It might be interesting to see if TSLA management thinks the recall issues are important enough to be covered in their earnings press release or the associated teleconference, and how they might answer any questions they may receive from them. analysts regarding recalls.
Activity Benefits and TSLA options
TSLA is expected to release its results after the close on Wednesday. Third-party analysts seek consensus estimated earnings of $ 1.00 per share, compared to $ 0.41 a year ago, on revenue of $ 10.32 billion—Approximately 39.7% above quarterly sales for the last quarter.
The options market has integrated a 4.7% expected change in the share price in both directions around the publication of results, according to the Market Maker Move ™ indicator on the thinkorswim® platform.
Looking at the January 29 options expiration, put options were active on strikes 700, 750 and 800. Higher concentrations were however deemed to be on the rise, with significant call volume on the 850 and 900 strikes. , even higher at the 1000 strike. Implied volatility is at the 15th percentile as of Monday morning.
Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a specified period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a specified period of time.
The electric vehicle race
Meanwhile, the company appears to continue to accelerate steadily as electric vehicles become more popular, not in small part thanks to TSLA itself.
As interest accelerates, competition from TSLA also intensifies. Especially, Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) have been wading through the waters of EVs, and their investors apparently see a positive thing in it. This is a longer-term concern for TSLA, as F and GM are already accomplished auto makers with years of experience they can bring to building electric vehicles.
And across the Pacific, recent entrants such as Nio Inc (NYSE: NIO) are in TSLA’s rearview mirror and appear to be picking up speed.
However, batteries remain the key ingredient in electric vehicles and TSLA occupies a strong position there. So it appears that as other companies gain traction in the EV space, a real competition issue could arise for TSLA for some time.
Despite the moats of its battery prowess, as well as a string of profitable quarters, much of TSLA’s valuation has been based on potential future performance rather than current fundamentals.
With a recent price-to-earnings ratio north of 1600% and a stock price that has risen nearly 640% year-on-year as of Friday’s close, cautious investors may want to know more about the evolution of the fundamentals before diving to these levels. .
Perhaps the fourth quarter earnings report will provide more clarity.
TD Ameritrade® Commentary for educational purposes only. SIPC member. Options involve risk and are not suitable for all investors. Please read Characteristics and risks of standardized options.
Photo by Tech Nick on Unsplash
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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