When Will Tesla, Inc. (NASDAQ:TSLA) Breakeven?

Tesla, Inc.’s (NASDAQ:TSLA): Tesla, Inc. designs, develops, manufactures, and sells electric vehicles, and energy generation and storage systems in the United States, China, Netherlands, Norway, and internationally. The US$68b market-cap posted a loss in its most recent financial year of -US$976.1m and a latest trailing-twelve-month loss of -US$835.1m shrinking the gap between loss and breakeven. As path to profitability is the topic on TSLA’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for TSLA’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Tesla

Consensus from the 29 Auto analysts is TSLA is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$208m in 2020. So, TSLA is predicted to breakeven approximately a few months from now. What rate will TSLA have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 69%, which is rather optimistic! If this rate turns out to be too aggressive, TSLA may become profitable much later than analysts predict.

 

NasdaqGS:TSLA Past and Future Earnings, December 19th 2019
NasdaqGS:TSLA Past and Future Earnings, December 19th 2019

 

Underlying developments driving TSLA’s growth isn’t the focus of this broad overview, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with TSLA is its debt-to-equity ratio of 157%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and TSLA has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on TSLA, so if you are interested in understanding the company at a deeper level, take a look at TSLA’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:

  1. Valuation: What is TSLA worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether TSLA is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Tesla’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

If you spot an error that warrants correction, please contact the editor at [email protected]. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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