Tesla Inc. (NASDAQ:TSLA)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows a significant upward trend from 2020 to 2022, increasing from 2,291 million USD in 2020 to a peak of 14,874 million USD in 2022. However, after this peak, there is a decline in the following years, with NOPAT decreasing to 11,309 million USD in 2023 and further to 8,828 million USD in 2024. This suggests an initial period of strong operational profit growth followed by a notable contraction in profitability.

Cost of Capital

The cost of capital remains relatively stable over the five-year period, fluctuating slightly between 26.89% and 27.6%. This indicates that the company's required rate of return on invested capital has been consistent, with minimal volatility despite changes in market or company-specific risks.

Invested Capital

The invested capital consistently increases throughout the period, starting at 39,217 million USD in 2020 and rising to 67,545 million USD in 2024. This steady growth signals ongoing investments into the company’s assets or operations, suggesting expansion or increased capital expenditure activities over time.

Economic Profit

Economic profit exhibits volatility across the years. It starts with significant negative values in 2020 (-8,254 million USD) and 2021 (-3,886 million USD), improves to a positive economic profit of 1,181 million USD in 2022, then deteriorates again in 2023 (-5,027 million USD) and further declines in 2024 (-9,815 million USD). This pattern indicates that despite growing invested capital and fluctuating NOPAT, the company has generally struggled to generate returns above its cost of capital, with the only exception being 2022.

The financial data reveals notable fluctuations in key profitability metrics over the five-year period.

Net Income Attributable to Common Stockholders

Net income shows an overall increasing trend from 2020 to 2023, rising from $721 million in 2020 to a peak of $14,997 million in 2023. This represents a substantial growth in profitability over the first four years. However, in 2024, net income experiences a significant decline to $7,091 million, falling to less than half of the previous year's figure. This sudden drop interrupts the prior growth trajectory and suggests potential challenges or changes affecting net profitability in the most recent year.

Net Operating Profit After Taxes (NOPAT)

NOPAT follows a broadly upward movement from 2020 through 2022, increasing from $2,291 million to $14,874 million. This rapid growth underscores enhanced operating efficiency or higher operational earnings during this phase. Contrary to net income, NOPAT declines more moderately in 2023 and 2024, decreasing to $11,309 million and then to $8,828 million respectively. Despite the decline after 2022, NOPAT remains significantly above the 2020 base level over the entire period, indicating sustained operational profitability.

Comparatively, net income's volatility is more pronounced than that of NOPAT, especially in the latest year where net income dropped sharply relative to NOPAT. This could point to increased non-operating expenses, tax effects, or other one-time items impacting net income beyond operational performance. Overall, the company exhibited strong growth in profitability metrics until 2022, followed by a period of contraction in both net income and NOPAT through 2024.

Provision for (benefit from) income taxes

There is a notable increase in the provision for income taxes from 292 million US dollars in 2020 to 1,132 million US dollars in 2022, indicating a rising tax expense over this period. However, in 2023, the provision shifts dramatically to a benefit of -5,001 million US dollars, representing a significant tax benefit or reversal. In 2024, the provision returns to a positive amount of 1,837 million US dollars, suggesting a reinstatement of tax expenses though at a higher level than in previous years except for 2023.

Cash operating taxes

Cash operating taxes demonstrate a consistent upward trend from 422 million US dollars in 2020 to 1,335 million US dollars in 2022. However, in 2023 and 2024, cash taxes slightly decrease to 1,208 million and 1,164 million US dollars respectively. Despite this slight decline, the cash tax payments remain significantly higher than the 2020 level.

Overall Analysis

The data shows a divergence between the provision for income taxes and the cash operating taxes particularly in 2023, where the provision indicates a substantial tax benefit while cash taxes remain relatively stable and elevated. This pattern may suggest the influence of deferred tax accounting, tax credits, or other temporary differences affecting book income tax expense but not cash payments in that year. The fluctuations in the provision for income taxes reflect variability likely driven by changes in profitability, tax planning strategies, or legislative impacts. Meanwhile, cash taxes show a more stable yet gradually increasing pattern over the observed period.

Total Reported Debt & Leases

The total reported debt and leases exhibit a declining trend from 2020 through 2022, decreasing substantially from 13,228 million US dollars in 2020 to 5,748 million US dollars in 2022. However, this decreasing pattern reverses starting in 2023, where debt rises sharply to 9,573 million US dollars, followed by a further increase to 13,623 million US dollars in 2024, nearly returning to the 2020 level.

Stockholders’ Equity

Stockholders’ equity shows a consistent and strong growth trajectory over the five-year period. Starting at 22,225 million US dollars at the end of 2020, equity increases each year, reaching 72,913 million US dollars by the end of 2024. This steady rise reflects an accumulation of retained earnings and potentially increased capital contributions.

Invested Capital

Invested capital also demonstrates a continuous upward trend from 39,217 million US dollars in 2020 to 67,545 million US dollars in 2024. The increase is gradual with moderate growth between 2020 and 2021, followed by more pronounced growth in the subsequent years. This pattern suggests ongoing investments in the company’s operations and assets.

Summary of Trends

Over the period analyzed, there is evidence of a strategic shift in the company's financial structure. Initially, debt levels are reduced significantly until 2022, indicating efforts to deleverage the balance sheet. However, from 2023 to 2024, debt increases substantially, possibly to finance expansion or capital expenditures as reflected in the rising invested capital. Concurrently, stockholders' equity consistently grows, highlighting strong equity financing or retained earnings accumulation, enhancing the company's capital base. The simultaneous increase in invested capital and equity suggests robust reinvestment and capital strengthening, while the fluctuation in debt indicates a dynamic approach to leveraging.

Economic Profit

The economic profit displayed a fluctuating trend over the five-year period. Initially, there was a significant negative value of -8254 million US dollars in 2020, which improved substantially to -3886 million US dollars in 2021. In 2022, the company experienced a positive economic profit of 1181 million US dollars, indicating a notable turnaround. However, in the subsequent years, the economic profit declined sharply again to -5027 million US dollars in 2023 and further to -9815 million US dollars in 2024, reaching levels worse than at the start of the period.

Invested Capital

Invested capital showed a consistent upward trend throughout the period under review. It increased steadily from 39,217 million US dollars in 2020 to 67,545 million US dollars by the end of 2024. This reflects a continuous growth in the amount of capital invested, with an increase of over 72% from the initial value in 2020 to the value in 2024, suggesting ongoing expansion or increased asset base.

Economic Spread Ratio

The economic spread ratio exhibited variation aligning somewhat with the economic profit trend. It was negative in most years, starting at -21.05% in 2020 and improving to -9.66% in 2021, followed by a positive spread of 2.38% in 2022. After this peak, the ratio again declined to negative values of -8.46% in 2023 and further worsened to -14.53% in 2024. This pattern suggests that the returns on invested capital relative to cost of capital were generally insufficient to generate positive economic value except in 2022.

The financial data over the analyzed periods reveals distinctive trends across key performance indicators.

Adjusted Revenues

There is a clear upward trend in adjusted revenues from 2020 through 2023, increasing from approximately 31.9 billion US dollars to nearly 98.3 billion US dollars. However, in 2024, revenues show a slight decline or stabilization standing at around 98.1 billion US dollars, indicating a plateau after several years of robust growth.

Economic Profit

The economic profit exhibits significant volatility and negative figures in most years. Starting with a substantial loss of approximately 8.25 billion US dollars in 2020, the loss decreases notably in 2021 to around 3.89 billion US dollars. A positive turnaround is observed in 2022, recording a profit of roughly 1.18 billion US dollars. However, losses reappear in the following years, with a loss worsening to about 5.03 billion US dollars in 2023 and further increasing to around 9.82 billion US dollars in 2024, signaling challenges in sustaining profitability despite revenue growth.

Economic Profit Margin

The economic profit margin follows a pattern similar to economic profit, reflecting negative margins in most periods except in 2022, where a positive margin of approximately 1.43% is achieved. Margins deteriorate over time, beginning at -25.87% in 2020, improving to -7.12% in 2021, peaking positively at 1.43% in 2022, before declining again to -5.11% and -10.01% in the subsequent years. This signals instability in converting revenues into economic profit, with profitable operations not consistently maintained.

Overall, while the company demonstrates substantial growth in adjusted revenues over the five-year period, the economic profit figures and margins indicate difficulty in achieving sustained profitability. The one-year positive economic profit in 2022 is an exception rather than a new trend, as losses deepen again afterwards. This suggests that despite increasing top-line performance, underlying cost structures, investment demands, or other financial pressures continue to impact overall economic profitability negatively.