Tesla’s share price pushed higher in after-hours trading last night following the release of its first-quarter numbers.
The company managed to post a profit of $16 million – its third consecutive quarterly profit. Revenue for the period was $5.99 billion, which was in line with forecasts.
Coronavirus to impact production
Tesla started off the financial year on a positive note, partially because it set out bullish targets, but now because of the Covid-19 crisis, the group might not live up to the expectations. In the three-month period, the firm had a negative cash flow of $895 million – contradicting its pledge to be cash flow positive.
Tesla said its operations have "installed capacity" to produce 500,000 vehicles, but the group warned that disruptions to supply chains as well as factory closures might throw the company off course.
Tesla's Q4 share price boost
Tesla’s share price was given a lift in late January when the company posted a great set of fourth-quarter figures. EPS came in at $2.14, which hammered the $1.72 consensus estimate. Revenue for the three-month period was $7.38 billion, which narrowly exceeded forecasts. The firm said that net income along with cash flow will be positive going forward.
The fourth-quarter production figures were strong, as the number of vehicles produced was 112,000 – a record level. Tesla had an annual production target of 360,000-400,000 vehicles. Some traders were questioning the company’s ability to achieve its forecast, especially as output in the first couple of quarters wasn’t overly impressive. But thanks to a robust final quarter the company managed to achieve the lower end of its production guidance. The electric car manufacturer declared its intention to produce at least 500,000 vehicles in the new financial year.
The ambitious production target was announced when the health emergency was only a serious problem for certain parts of China, so before it became a pandemic. Tesla’s Shanghai auto plant was closed temporarily due to the health crisis. The operation at Fremont, California was also forced to close due to local health regulations. It was reported the company had requested dozens of employees to return to work at the site, but the firm has since performed a U-turn.
Rollercaster ride for Tesla share price
The Tesla share price has been on a wild ride in 2020. The stock accelerated to a record high in February, but when it became apparent the coronavirus was going to be a global crisis, the share price took a hammering. Overall market sentiment began to turn around last month, and since the lows of March, the Tesla share price is up over 125%. The stock has managed to claw back approximately 75% of the ground it lost during the Covid-19 related sell off.
The Tesla share price has been driving higher for over a month now, and while it holds above the $700 mark, the bullish trend should continue.
Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.