Tesla (TSLA) Q1 2021 - Long term bullish

Tuesday, April 27, 2021

Highlights from last night's Q1 report

·        Highest ever vehicle production and deliveries

·        Model 3 was the best-selling premium sedan in the world

·        Total revenue grew 74% YoY in Q1

·        Energy storage deployment grew 71% YoY in Q1 and solar deployment reached 92 MW

·        Average selling price (ASP) declines in Q1 while gross margin increased

Tesla(TSLA) just announced last night their Q1 Financial Results and we are extremely bullish on the company long term. Here, at Financial Flagship we think that Tesla can and will disrupt many trillion dollar industries like the automotive, energy and potentially AI and robotics through their specialized FSD (full self driving) neural net and the supercomputer that they are building, Dojo.

Several factors contributed to Tesla's record first quarter in 2021, but it all came down to the numbers, as usual. Following its highest quarter in terms of deliveries and production, the automaker was able to increase its automotive gross profit while lowering production costs.

Here is a detailed financial summary from the report

Financial summary Q1 2021

Elon Musk, Tesla's CEO (and Technoking), announced in the conference call that he is expecting the new factories (Giga Berlin and Texas) to start production and begin deliveries later this year and achieve high volume production next year. The Tesla Semi is now due to begin deliveries later this year, according to the automaker's Product Outlook section, which is good news for the many pre-orders of the all-electric commercial vehicle. They will also, unveil a future product that is rumored to be a low cost model (Model 2?) that will further advance their goal to transition the transportation system to sustainability.

Installed annual capacity and future roadmap

Tesla is also stepping up its efforts to create Full Self-Driving (FSD), with the goal of eventually relying solely on vision and eliminating radar from its cars. The Tesla AI team is busy working on FSD Beta version 9, which will soon be more widely available in the United States. FSD Beta was identified by Elon Musk as one of the most challenging technological problems to solve, but the company has made significant progress in this field. Solving FSD is a matter of having a huge dataset, and Tesla is the undisputed leader in this field, according to Musk. With a large fleet of over one million vehicles currently on the road, the corporation has a significant advantage in handling edge cases. “It's very difficult, but we're quite sure that we'll be able to do it,” Musk said.

Another area where Tesla is making progress is their new "4680" battery cells, which according to Musk, they should achieve volume production next year. This new battery cell, explained in detail at the Battery Day event in September 2020, will enable Tesla to produce cars who pack more energy density (meaning more mileage for the costumer) per battery, have a better cell design and internal structure (tabless battery) and a much lower environmental cost.

TSLA chart on the Daily (D) timeframe

Technically, we see a strong uptrend that started in 2019 and stopped in January 2021 for a bigger correction.Taking into account all the fundamental developments explained above we are rating this stock as a strong buy. The blue trendline marked on the chart holds as a dynamical support zone. There is a scenario where it could break the trendline and head to the support area of $400 per share but the higher probability is the continuation to the upside. If you are not trading this stock and you’re an investor with a long term horizon, any pullback you see for this one is an opportunity for a buy.