In an informative thread posted on Twitter, Tesla bull and chartered financial analyst Mayur Thaker referenced a series of charts he generated, then compared the charts to a perfect exponential curve.
As of Friday's market close, Tesla ($TSLA) stock traded at $430.38 per share, down 0.13% from Thursday's close; as compared to the S&P 500, which weighed in at $3240.02, up 0.11% from Thursday's close.
Thaker has been known to publish charts, graphs, and figures from Tesla's records and earnings reports in support of Tesla's future outlook. In his most recent set of graphs, Thaker compared Tesla's performance in several benchmark categories commonly used to measure companies' financial health, and compared these figures to a standard exponential curve.
To Thaker's credit and for the sake of fairness, a graph was included showing Tesla's free cash flow numbers, which have been somewhat lackluster so far, but not necessarily dooming. Free cash flow is calculated by taking cash in and subtracting the funds necessary to purchase and maintain capital assets. In Tesla's case, Tesla has been planning, preparing, and building factories almost back-to-back for the past four years, it is unsurprising that Tesla's free cash flow would look grim; factories cost a lot, but depreciate slowly. Just because money is spent on building/maintaining a factory does not mean that money is removed completely, it is just a non-liquid asset.
The net positive free cash flow in the past twelve months came as a big surprise to both bulls and bears, and was a large factor in driving the early stages of the price surge Tesla has seen in the past six months.
Next up on the list is operating cash flow, which is the same as free cash flow, however operating cash flow takes into account the fact that capital expenditures do not necessarily represent a net loss.
When tracking the average curve along the points, the operating cash flow numbers make a curve that is 58.6% symmetric with a perfect exponential.
Next up on the list, and next in order of impressiveness is the chart representing Tesla's EBITDA, which stands for earnings before interest, tax, depreciation, and amortization. EBITDA is closely correlated with net income, and is a fairly simple, but accurate way to gauge a company's growth and sales.
Tesla's EBITDA numbers are phenomenal. The year-over-year change represents a trend that is 93.4% similar to a perfect exponential curve. This is representative of a huge uptrend in sales of Tesla vehicles, as well as the expansion of Tesla's energy and solar divisions.
If 93.4% was not convincing enough, Tesla shined the most in revenue and gross profit. Both graphs plotted a curve 99.2% congruent with a perfect exponential. This is especially notable considering that even in the face of increased expenses due to rapid ramping and expansion, revenue is able to keep up with the growth.
Again, both of these graphs show a 99.2% congruence to the perfect exponential curve. Tesla's numbers are not as bad as shorts like to publicize. Many skeptics take metrics such as free cash flow, and use them as "proof" that Tesla is heading to the ground, whereas in reality, using FCF without also referencing OCF and year-over-year revenue is to ignore context completely.
Tesla bulls can reasonably expect Tesla sales numbers to be released this week, and 4Q2019's earnings report will be published a month from today, on January 29, 2019. Given all the news buzz in the past few months, this earnings report could go either way. Even if the earnings report seems negative, it is no doubt that Tesla is pulling great feats out of the woodwork, and the next 3-5 years should truly highlight Elon and Tesla's abilities and outlook.
Cover image used courtesy of Tesla Inc.
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Christopher Larson is not a shareholder in Tesla, Inc., and does not currently (at the time of this article's publishing) hold any bonds, options, or securities in Tesla Inc. or its affiliates.