Tesla stock zooms on "game changing" earnings
Tesla, Elon Musk's much hyped, and much questioned, electric car maker, is on a roll with investors. Its stock price soared as much as 11% Thursday to $645 a share. That added another $12 billion to the company's stock market value, which now tops $100 billion.
The rev-up came after the company's sales and earnings reports late Wednesday topped Wall Street forecasts for the final three months of 2019.
Company founder and CEO Musk also predicted Wednesday that Tesla would ship a half-million Model 3s next year — an ambitious goal for a car that some once said would never get off the assembly line and that Musk is now counting to propel the company into the mass market. With a base price of $35,000, the Model 3 is the lowest priced Tesla vehicle.
Tesla confirmed on Wednesday that it delivered 367,000 Model 3s in 2019. Tesla also said a new SUV, the Model Y, is on the way.
Investors cheered the latest results, propelling the already hot stock even higher. Tesla's stock price has soared nearly 50% in one month and has more than doubled since the end of October. The U.S. market's broader S&P 500-stock index, by comparison, is up 8% in the past three months.
Tesla became the most valuable U.S. car company ever on Jan. 8, when its stock market value surpassed $89 billion. It's now valued at about $117 billion, or more than such giants as General Electric, UPS or American Express.
Daniel Ives, an analyst who follows Tesla for Wedbush Securities, called Wednesday's results a "game changer," and predicted in a note to clients that the stock could hit $900. "The bull party will likely continue," Ives wrote.
On a conference call with stock analysts Wednesday evening, Musk lauded the idea that his company creates its own buzz. "To have the highest demand electric vehicle in the world with no advertising is I think quite remarkable," he crowed.
But the stock's heat could someday singe investors, some critics warned Thursday. Tesla shares now trade at 85 times projected 2020 earnings of nearly $1.4 billion. The average price-to-earnings multiple for companies in the S&P 500 is nearly 19. It means investors have faith that little will go wrong for Tesla in the future.
Boosting the company's latest results were better-than-expected sales of the Model 3. Tesla shipped 112,000 Model 3s in the fourth quarter, or about 5% more than expected. That boosted total sales for the quarter to nearly $7.4 billion and earnings to $174 million.
It was also the second quarter in a row in which the company reported a profit. That hasn't happened very often for Musk's 17-year-old car company, which has long been a money loser. For all of 2019. Tesla lost more than $850 million.
The company also on Wednesday told analysts its China factory in Shanghai had been temporarily shut by Chinese officials to help slow the spread of the new coronavirus outbreak. Tesla he said it expects the plant to be closed for a week and a half. That could slightly lower the company's earnings next quarter, CFO Zach Kirkhorn said. As for overseas parts for its U.S.-made cars, Tesla said it is not yet seeing any delay in parts coming from China.