Tesla Inc. (NASDAQ:TSLA)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes displayed a strong upward trend initially, increasing significantly from 2,291 million US dollars in 2020 to a peak of 14,874 million US dollars in 2022. However, this was followed by a decline in the subsequent years, falling to 11,309 million in 2023 and further down to 8,828 million in 2024. This suggests that while operational efficiency or profitability improved markedly until 2022, there were challenges or reduced profitability in the last two reported years.

Cost of Capital

The cost of capital remained relatively stable over the five-year period, fluctuating narrowly between 27.31% and 28.03%. This indicates a consistent required rate of return by investors or stable market conditions affecting the company’s capital cost structure.

Invested Capital

Invested capital showed a steady growth throughout the period, rising from 39,217 million US dollars in 2020 to 67,545 million in 2024. This reflects ongoing investments in assets or operational capacity, signaling expansion or increased resource commitment to support business activities.

Economic Profit

Economic profit experienced considerable volatility and overall negative values except for a brief positive peak in 2022. It improved from -8,418 million in 2020 to -4,060 million in 2021, then turned positive to 966 million in 2022. However, economic profit sharply declined afterwards, falling to -5,282 million in 2023 and further to -10,107 million in 2024. This pattern indicates the company generally did not cover its cost of capital, except in 2022, suggesting that invested capital was not generating sufficient returns above its economic cost in most years.

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 exhibited considerable volatility over the five-year period. It started with a significant negative value of -8,418 million US dollars in 2020, improved markedly by 2022 to reach a positive 966 million, indicating a temporary phase of value creation. However, this was followed by a reversal, with economic profit declining again to -5,282 million in 2023 and further deteriorating to -10,107 million by the end of 2024. This suggests challenges in sustaining profitability and generating returns above the cost of capital.

Invested Capital

Invested capital showed a consistent upward trend, increasing from 39,217 million US dollars in 2020 to 67,545 million in 2024. This indicates ongoing capital deployment, possibly for expansion or other strategic initiatives. The growth in invested capital reflects substantial resource commitment over the years.

Economic Spread Ratio

The economic spread ratio, which measures returns over the cost of capital as a percentage, was negative throughout most of the period except in 2022. Starting at -21.47% in 2020, it narrowed significantly to -10.09% in 2021 and turned positive to 1.95% in 2022, suggesting a brief period where the company earned returns above its cost of capital. However, this positive momentum was not sustained, with the ratio declining back to -8.89% in 2023 and further to -14.96% by 2024, reinforcing the notion of difficulty in maintaining economic value creation.

Overall Analysis

The financial data indicates that while the company has been increasing its invested capital steadily, it has faced challenges in converting this investment into sustained economic profit. The ephemeral positive economic spread in 2022 highlights the potential for value generation, yet the subsequent decline points to operational or market conditions inhibiting continued profitability above the cost of capital. The persistent negative economic profit in most years underscores the need for strategic measures to improve efficiency and financial returns.

Revenue Trends

The adjusted revenues demonstrated a consistent upward trend from 2020 to 2023, growing from approximately $31.9 billion to $98.3 billion. However, in 2024, there was a slight decline, with revenues decreasing marginally to around $98.1 billion. This indicates strong revenue growth over the five-year span, with a plateau or slight contraction in the most recent year observed.

Economic Profit Analysis

The economic profit exhibited significant volatility during the period. In 2020, the company recorded a substantial economic loss of approximately $8.4 billion, which improved notably to a less negative figure of about $4.1 billion in 2021. In 2022, the company achieved a positive economic profit of $966 million, indicating an improvement in profitable performance. However, this was followed by a deterioration in 2023 and 2024, with economic losses increasing again to around $5.3 billion and $10.1 billion respectively. This suggests that after a brief period of economic profitability, the company reverted to incurring notable economic losses.

Economic Profit Margin

The economic profit margin reflects the ratio of economic profit relative to revenues and showed a similar pattern to the economic profit itself. The margin improved from a deep negative of -26.38% in 2020 to a less severe -7.44% in 2021, then reached a positive margin of 1.17% in 2022. Subsequently, the margin declined again, turning negative to -5.37% and further to -10.31% in 2023 and 2024, respectively. This trend confirms the temporary recovery in profitability was not sustained, with profitability margins deteriorating alongside economic profit losses.

Summary of Financial Performance

The data reveals strong revenue growth over the observed period, interrupted only by a slight decline in the final year. However, despite increasing revenues, the company struggled with maintaining consistent economic profitability. After initial heavy losses and a brief season of profit, economic losses intensified again, accompanied by declining profit margins. This indicates challenges in converting revenue growth into sustained economic profit, suggesting potential issues with cost management, investment returns, or other underlying factors influencing economic profit.