Tesla Inc (NASDAQ:TSLA): When Will It 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, Norway, and internationally. On 31 December 2017, the US$56.61B market-cap posted a loss of -US$1.96B for its most recent financial year. Many investors are wondering the rate at which TSLA will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for TSLA’s growth and when analysts expect the company to become profitable.

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Expectation from analysts is TSLA is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$825.47M in 2020. TSLA is therefore projected to breakeven around 2 years from now. How fast will TSLA have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 61.31% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, TSLA may become profitable much later than analysts predict.

NasdaqGS:TSLA Past Future Earnings Mar 6th 18

Underlying developments driving TSLA’s growth isn’t the focus of this broad overview, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. TSLA currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and TSLA has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of TSLA which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at TSLA, take a look at TSLA’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should look at:

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.
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.
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.

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