Tesla earnings preview: Investors eye 2021 targets after record-setting year - Yahoo Finance

Tesla (TSLA) is set to report fourth-quarter results Wednesday after market close, offering the last look at the electric car-maker’s performance at the end of a record-breaking year and early guidance for this year.

Here are the main results expected in Tesla’s report based on consensus estimates compiled by Bloomberg:

Tesla will likely post its first-ever quarter doing $10 billion in revenue and sixth straight quarterly profit, capping off a banner year for the company. Consensus analysts expect to see Tesla post more than $2 billion in quarterly adjusted EBITDA – a milestone which would trigger a massive payout for CEO Elon Musk, whose compensation plan is based in part on hitting certain operational targets.

Such a result would bring Tesla’s trailing four quarters of EBITDA to more than $6 billion, or enough to unlock his fifth tranche of options based on his vesting requirements. This would enable Musk to purchase another 8.4 million Tesla shares for a profit of nearly $7 billion, Reuters reported.

In 2020, aided by the production ramp-up of its Shanghai Gigafactory, Tesla reported record vehicle deliveries, broke ground at its forthcoming facilities in Germany and in Texas and joined the S&P 500 after months of speculation over its inclusion. The stock was rewarded with a more than 740% surge in 2020, and shares are already higher by 24% for 2021 to date.

“Given TSLA stock doubling again since November, we believe investors are grappling with where shares go from here. We believe bulls are betting on TSLA leading commercialization of autonomous vehicles technology,” Oppenheimer analyst Colin Rusch said in a note last week. Rusch more than doubled his price target on Tesla shares to $1,036 from $486. “While we continue to have misgivings about risks related to TSLA not incorporating LiDAR [Light Detection and Ranging] into its vehicles yet, we believe the learning cycles enabled by having over 1M vehicles on the road is an extraordinary advantage.”

Tesla’s vehicle delivery target for 2021 will be one of the key metrics investors eye in this week’s report. The company closed out 2020 by handing over 499,550 cars for the full year, coming up just trivially short of the half-million figure many analysts on Wall Street homed in on as their target. Still, Tesla’s deliveries rose 36% versus 2019’s 367,500, growing during a time when the coronavirus pandemic pushed major legacy carmakers like Ford (F), General Motors (GM) and Fiat Chrysler (FCAU) to report full-year declines in auto sales.

“We believe the initial line in the sand for delivery unit guidance is in the ~750k range with upside bias given the growth we are seeing not just in China, but in Europe and the U.S. with EV [electric vehicle] demand accelerating globally,” Wedbush analyst Dan Ives said in a note Sunday. “There has been a massive appetite in the market for EV stocks led by Tesla over the past year as the demand trajectory for the EV sector continues to move markedly higher.”

Tesla CEO Elon Musk gets back into his Tesla after talking to media before visiting the construction site of the future US electric car giant Tesla, on September 03, 2020 in Gruenheide near Berlin. - Tesla builds a compound at the site in Gruenheide in Brandenburg for its first European "Gigafactory" near Berlin. (Photo by Odd ANDERSEN / AFP) (Photo by ODD ANDERSEN/AFP via Getty Images)

He added that China is “the heart and lungs of the Tesla bull thesis,” and predicted that at least 40% of Tesla’s overall deliveries could come from China by 2022. While Tesla does not break out sales or deliveries by region, the sharp sales growth of Chinese electric-vehicle makers including Nio (NIO) Li Auto (LI) and Xpeng (XPEV) have recently underscored the swelling demand out of the world’s largest electric-vehicle market.

But in the U.S., the Biden administration and newly instilled Democratic majorities in both chambers of Congress have also helped ignite hopes for more amenable policies for clean energy companies and electric car manufacturers, which could serve to further fuel demand and sales at companies like Tesla.

“A Biden White House and Blue Senate is a very bullish political backdrop and a potential ‘game changer’ for Tesla and the overall EV sector in the U.S., with a more green-driven agenda now certainly in the cards over the next few years,” Ives said.

Meanwhile, incremental updates on other Tesla priorities are set to pull focus on Wednesday. CEO Elon Musk said in September that the company would be working to produce its own 4680 tabless cells, which would ultimately slash battery costs and enable a $25,000 car to be manufactured in the next three years. Musk also said during the company’s last earnings call in October that Tesla would be able to do “some Cybertruck deliveries” towards the end of 2021, after first unveiling the new vehicle in late 2019.

This post will be updated with the results of Tesla’s 4Q 2020 results Wednesday after market close. Check back for updates.

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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