Tesla, Inc.

TSLA Details

Turnaround with Profits in FY20: Tesla, Inc. (NASDAQ: TSLA) is an American electric vehicle and clean energy company. Tesla, Inc.’s products include electric cars, battery energy storage from home to grid scale, solar panels and solar roof tiles, as well as other related products and services. TSLA has posted robust financials in Q4FY20. The total revenues in Q4FY20 have increased 46% YoY to US$10,744mn from US$7,384mn in Q4FY19, whereas the net income increased 157% YoY to US$270mn in Q4FY20 from US$105mn in Q4FY19. Free Cash Flow increased to US$1,868mn in Q4FY20 from US$1,013mn in Q4FY19, an increase of 84% YoY. TSLA has registered a profit of US$721mn in FY20 as compared with a loss of -US$862mn in FY19. The company has registered a consistent revenue growth during FY16 to FY20 at a CAGR of 46%. The company is posting positive cash flows from its operations from past 3 years now and has registered a positive cash flow of US$5,943mn in FY20.

Revenue and Income Growth Chart (Source: Company Reports)

Outlook: TSLA is working towards expanding capacity for vehicle production across three continents. TSLA has commenced Model Y production earlier than anticipated. TSLA expect to increase annual production capacity to 500,000 vehicles from current installed annual production capacity for 400,000 vehicles. As per the company report, TSLA generates enough cash from core operations to cover future capital expenditures and to pay off near-term debt obligations.

Stock Recommendation: In the last 1 month, TSLA has increased by 17.11% on NASDAQ. The stock is currently trading near to its 52-week high price of $900.40. On the technical analysis front, the stock has a support level of ~$802.67 and resistance of ~$882.39. TSLA is currently building Model Y capacity at Gigafactory Berlin and Gigafactory Texas and remain on track to start deliveries from each location in 2021. Gigafactory Shanghai will continue to expand further through the course of the year. Tesla Semi deliveries will also begin in 2021. Considering the company’s robust revenue growth during December 2020 quarter, decent FY20 results, expanding vehicle production capacity, we recommend a “Hold” rating to the stock at the closing price of $854.69 as on 03 February 2021.

TSLA Daily Technical Chart (Source: Refinitiv, Thomson Reuters) 

Opendoor Technologies Inc.

OPEN Details

Diversified Businesses Across Housing Segment: Opendoor Technologies Inc. (NASDAQ: OPEN) is a leading digital platform for residential real estate. Opendoor Technologies Inc currently operates in 21 cities and neighborhoods across the US regions with a market share of 2%. Opendoor operates around activities related to housing needs such as Financing, Insurance, Maintenance and more.

Capital Raising Via Issue of Common Stock: Opendoor Technologies Inc has recently announced proposed public offering of 24mn common stock with an additional 3.6mn shares to its offerings, which will provide more supply of equity in the market that may result in pressure on the stock price. The company has registered a decline in 3QFY20 Home sales to US$1,232mn as compared with US$4,783mn in 3QFY19 similarly revenues have declined in 3QFY20 to US$339mn from US$1,211mn in 3QFY19.

Homes Sold and Revenues Chart (Source: Company Reports)

Outlook: Opendoor Technologies Inc. is projecting a lower sale of homes in FY20 and FY21 due to COVID-19 impacts, but the company is expecting an uptick in sales and revenues from FY22 onwards.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: In the last 1 month, the stock of OPEN has increased by 19.2% on NASDAQ and 57.2% in last 3 months. The stock is currently inclined towards its 52-week high price of $32.38. On the technical analysis front, the stock has a support level of ~$25.93 and resistance of ~$31.09. We have valued the stock using EV/Sales multiple based illustrative relative valuation method and have arrived at a target price with a correction of lower single digit (in % terms). For the purpose, we have taken peers Zillow Group Inc (NASDAQ: ZG), Marcus & Millichap Inc (NYSE: MMI), ANGI Homeservices Inc. (NASDAQ: ANGI). Considering subdued home sales, modest FY20 performance, current trading level, and valuation, we give an “Expensive” rating to the stock at the closing price of $28.61, up by 0.49% as on 03 February 2021.  

OPEN Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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