As the chart shows, Tesla has been generating negative free cash flow in most quarters from 2015 to 2020, signaling that the company has used more cash than it could bring in. Indeed, a review of Tesla's 10-Q reveals the reported profit and positive cash flow to be little more than smoke and mirrors. Tesla's balance sheet is currently home to more than $12.4 billion in long-term debt. Tesla annual free cash flow for … Coming back to the chart, the free cash flow chart above depicts Tesla’s quarterly cash outflow over 5 years from 2015 to 2020. The polarization is best visible in its stock price forecast for 2021. Amazon and Microsoft are strong contenders to achieve that feat. The valuation would change drastically (on the higher side) if we increase the PE multiple forecasts. In 4Q 2020, Tesla has a cash position of more than $19 billion sitting nicely in the banks. SNPR SPAC Joins the EV Charging Bandwagon With Volta Merger, General Motors Could Repeat Ford’s Magic in Q4 Earnings. With net cash of $2.7 billion obtained from financing activities and coupled with the generated free cash flow of $1.9 billion, Tesla’s cash on hand of $19 billion reported in 2020 4Q seems to add up now. In this sense, not only does Tesla have to deal with the high costs of maintaining its plants and equipment but also high-paid technical personnel who are often under union contracts. This has resulted in the growing cash reserves in Tesla’s balance sheets to the tune of $19 billion as of 2020 4Q. I have combined both the cash reserves and cash outflow into the same chart as shown above to compare Tesla’s cash on hand with cash outflow. View TSLA net cash flow, operating cash flow, operating expenses and cash dividends. Tesla cash outflow or cash burn can be derived from its historical free cash flow which is measured by deducting capital expenditures from operating cash flow. Will NIO Follow in Tesla's Footsteps and Buy Bitcoin? However, Tesla produced only about $1.9 billion of free cash flow in 2020 Q4. Our restricted cash is comprised primarily of cash as collateral for our sales to lease partners with a resale value guarantee, letters of credit, real estate leases, insurance policies, credit card borrowing facilities and certain operating leases. Currently, Apple is the only company that has a market capitalization of $2 trillion. Now, the tables have turned and legacy automakers are trying to make up for lost time. Tesla’s cash outflow in the chart is basically the same as the quarterly free cash flow which we discussed earlier. Tesla's free cash flow jumped to 1.9 billion U.S. dollars in the fourth quarter of 2020, up from 1.4 billion U.S. dollars in the third quarter. They were slow initially with their electric vehicle plans. Investors are bullish on the green energy and electric vehicle ecosystem. If you look closely at the current chart, Tesla’s cash outflow was the worst in 2017, leaving the company with a cash deficit of as much as $3.5 billion in the entire year. You might hate or love Tesla CEO Elon Musk, but he gets credit for redefining the automotive industry. Another under looked opportunity, while forecasting Tesla’s stock price, is the energy business. While Tesla may have been making some profits in recent quarters, it’s a different story when it comes to cash reserve or cash on hand in the balance sheets. For this reason, Tesla current asset has also been increasing over the years. Operating cash flow turned negative — a net $640 million going out the door over the three months versus a positive $1.23 billion in the previous period. When you add that amount to the prior quarter, the final figure of cash on hand arrived at the total $19 billion reported in 2020 4Q. You can credit back to this page by a link or a mention of the website. The growth in cash reserves is attributed to the expanding working capital requirement when the company is actively growing its business. Instead, Tesla far exceeded expectations, generating free cash flow of $881 million in the third quarter and earning a $312 million profit. The cash flow forecast however, will show the income and expenses including taxes, with separate tax payments occurring at a later date. Ten years of annual cash flow statements for Tesla (TSLA). As such, I have created the trailing 12-months (TTM) chart above to smooth out the bumps and to clearly show you the improvement in Tesla’s free cash flow. For this reason, Tesla (NASDAQ:TSLA) cash flow has always been a hot topic, not just among the investors but also the creditors. From a TTM perspective, we can clearly see that Tesla’s free cash flow did improve tremendously from 2019 and onward. The budget for wages is the gross wages while the cash flow forecast … How did Tesla manage to grow its cash on hand to $19 billion when the respective free cash flow was only $1.9 billion? If the momentum in Tesla stock continues and Musk lists his privately held companies, he could very well be the world’s first trillionaire. Moreover, in the third quarter, Tesla generated $1.395bn of free cash flow. The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Tesla Inc. To summarize, we found that Tesla Inc ranked in the 9th percentile in terms of potential gain … Tesla looks like the best way to play the electric vehicle story. Also, the core automotive business would continue to grow.