Tesla Revs Up, Makes Apple Acquisition Look Less Likely

Jacob Harper |

Just prior to providing earnings to investors, shares for the electric carmaker Tesla Motors (TSLA) touched an all-time high, eventually reaching $205 a share before dipping back down. When the much anticipated report was finally released after the closing bell on Feb. 19 it did not disappoint, and provided even more power for investors already wowed by a company that seemingly can’t run out of juice.

Concerns that demand for Tesla products had waned in light of a spate of car fires in the fall of 2013 were brushed aside, with sales of Tesla cars not being significantly affected by the bad press. The fact that Tesla was cleared of negligence and the car fires themselves were not statistically aberrant also seemed to placate consumers, who bought 22,450 last year. Tesla said they expect Model S sales to top 35,000 in 2014.

While the company improved earnings and revenue, what really amped up Tesla’s stock were two positive developments that suggest the company’s is expanding its reach into the mainstream – which is a necessity for their continued success. One, Tesla announced the construction of a battery plant to assuage concerns of a supply shortage. Two, the company announced a third generation product, an as-yet unnamed electric sedan that will retail in the $35,000 range. Their flagship Model S car sells for around twice that.

The lone worrying spot in the earnings report was the production delay of the second generation product, the Model X, until early 2015. Production was originally slated to begin in late 2014.

With the post-earnings pop, a popular rumor that Apple Inc. (AAPL) was looking to make some kind of blockbuster deal with Tesla, possibly even an outright acquisition, looks less and less feasible. With a price tag of $26 billion and rising, Tesla’s CEO Elon Musk would need a pretty compelling offer to give up any control of his rapidly growing property to a benefactor – even one that has global influence, a massively valuable brand, and a $160 billion war chest at their disposal.

For their fourth quarter 2013, Tesla reported a net gain of $46 million, or $0.33 per share, versus the net loss of $90 million, or $0.66 per share, from the same period a year ago. Revenue for the quarter was $677 million, as compared to $306.3 million from the same quarter the previous year. Analysts were expecting a profit of $0.20 per share on revenues of $660 million.

Tesla sold 6,892 Model S cars in the quarter, just barely missing their projection of 6,900 units. Tesla ramped up projected sales of the Model S, expecting a 55 percent uptick in 2014.

Tesla stock once again touched an all time high the day after the earnings report. By midday on Feb. 20 the company’s shares were trading at $211.88 a share, representing a gain of 9.42 percent. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TSLA Tesla Motors Inc. 192.18 -0.11 -0.06 2,722,505
AAPL Apple Inc. 113.95 1.83 1.63 34,402,627
PTNDF Pt Vale Indonesia Tbk 0.24 0.00 0.00 0

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