Tesla Shares Rocket to Fresh Record High After Earnings Blowout

Tesla shares surged in pre-market trading, lifting the value of Elon Musk's clean-energy carmaker past $106 billion, after smashing Wall Street's fourth quarter earnings forecasts.

Tesla Inc.  (TSLA) - Get Report shares rocketed higher in pre-market trading Wednesday after the carmaker blasted fourth quarter earnings estimates and said it will 'comfortably' deliver more than half a million clean-energy cars this year. 

Tesla said adjusted non-GAAP earnings for the three months ending in December rose 10.9% from the same period last year to $2.06 per share, smashing the Street consensus forecast of $1.75. Group revenues, Tesla said, rose 2.1% to $7.38 billion and again beat analysts' estimates of a 7.05 billion tally.

Looking into the 2020 financial year, Tesla said vehicle deliveries should "comfortably exceed" 500,000, which would represent at least an 86% improvement from 2019, and insisted it has no plans to raise capital even as it pledges to ramp-up battery production. 

"It's hard to think of another company that has more exciting product and technology roadmap, so, I'm super fired-up about where Tesla will be in the next 10 years," founder and CEO Elon Musk told investors on a conference call late Wednesday. "If you look back 10 years from today to 2010, we will produce approximately at 1,000 times more cars in 2020 then we produced in 2010."

Tesla shares were marked 7% higher in early trading Thursday to change hands at $621.20 each, an all-time high that would extend the stock's six-month gain to around 160% and value the clean-energy carmaker at just under $112 billion. 

Tesla's market value, in fact, sits well ahead of Volkswagen AG VLKAY, Europe's largest carmarker, which has fallen nearly 3% over the past three months to $95.2 billion. Japan's Toyota Motor Co., TM however, remains the world leader with a market value of around $195 billion.

"I do think that a lot of retail investors actually have deeper and more accurate insights than many of the big institutional investors and to me better insight than many of the analysts," Musk told analysts on the conference call. "It seems like if people really looked at some of the smart retail investor analysts and what some of the smaller retail investors predicted about the future of Tesla, they would -- you would probably get the highest accuracy and remarkable insight from some of those predictions."

Execution has been a major part of Tesla's recent surge, with the Palo Alto, California-based carmaker topping he lower end of Wall Street forecasts for 2019 deliveries with a full-year tally of 367,500 units, lead by the sale of 92,500 Model 3s over the three months ending in December.

"Critically, the company ended the quarter with $6.3 billion in cash and generated $1 billion of free cash flow in the quarter, which should finally put to rest any balance sheet concerns," said Canaccord Genuity analyst Jed Dorsheimer, who boosted his price target on the stock by 45% to $750.

"Essentially flat gross margins compared to the prior quarter were a meaningful feat given the ramp associated with Gigafactory Shanghai moving to begin production resulting in an operating margin of 4.9%, and we expect to see that number improve as deliveries of Chinese Model 3's begin," he added.