Tesla Inc. (NASDAQ:TSLA)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrated an overall upward trend from 2020 to 2022, increasing from $2,291 million to $14,874 million. However, there was a subsequent decline in the following two years, dropping to $11,309 million in 2023 and further to $8,828 million in 2024.

Cost of Capital

The cost of capital remained relatively stable over the five-year period, fluctuating narrowly between 27.63% and 28.37%, indicating consistent financing costs or risk perceptions during these years.

Invested Capital

Invested capital exhibited a continuous growth trend, rising steadily from $39,217 million in 2020 to $67,545 million in 2024. This suggests ongoing investment or asset accumulation by the company despite fluctuations in profitability.

Economic Profit

Economic profit showed significant volatility. The company experienced negative economic profits in four out of five years, indicating that returns fell short of the cost of capital. Specifically, substantial losses were seen in 2020 (-$8,546 million) and 2024 (-$10,335 million). The only positive economic profit was in 2022, at $799 million, coinciding with the peak in operating profit.

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.

The financial data reveals notable fluctuations in the company's economic profit over the analyzed periods. Initially, the economic profit was significantly negative at -8546 million US$ at the end of 2020, showing an improvement by 2022 when it turned positive to 799 million US$. However, this positive trend was short-lived as the economic profit again declined sharply in the subsequent years, reaching -10335 million US$ by the end of 2024. This indicates periods of substantial economic losses interspersed with a brief recovery phase.

Invested capital exhibited a consistent upward trajectory throughout the entire timeframe. It increased steadily from 39217 million US$ in 2020 to 67545 million US$ in 2024, reflecting ongoing investment and asset growth within the company.

The economic spread ratio, which measures the spread between return on invested capital and cost of capital, mirrored the volatility seen in economic profit. It was deeply negative at -21.79% in 2020, improved to a positive 1.61% in 2022, then declined again to -15.3% by 2024. This pattern aligns with the fluctuations in economic profit and highlights challenges in creating value above the cost of capital across multiple years.

Economic Profit

Fluctuated significantly, with large negative values in 2020 and 2024, a temporary positive value in 2022, indicating inconsistent profitability and value creation.

Invested Capital

Demonstrated steady growth annually, suggesting increasing asset base and investment made by the company over the period.

Economic Spread Ratio

Varied from strongly negative to slightly positive, then back to negative, signaling instability in generating returns that exceed capital costs.

Revenues

Revenues exhibited a strong upward trend from 2020 through 2023, increasing significantly from approximately 31.9 billion US dollars to a peak of about 98.3 billion US dollars. However, in the latest period ending in 2024, revenues stabilized, showing a slight decrease to around 98.1 billion US dollars, indicating a plateau after several years of rapid growth.

Economic Profit

The economic profit figures show considerable volatility across the periods. Starting with a substantial negative economic profit of about -8.5 billion US dollars in 2020, there was a marked improvement in 2021, with the loss narrowing to approximately -4.2 billion US dollars. The year 2022 saw a positive economic profit of nearly 0.8 billion US dollars, indicating a temporary turnaround in profitability. However, this positive achievement was not sustained, as the economic profit reverted to negative levels in 2023 (-5.5 billion US dollars) and further declined sharply in 2024 to approximately -10.3 billion US dollars, reflecting a deterioration in economic value creation in the most recent year.

Economic Profit Margin

The economic profit margin mirrors the pattern observed in economic profit. The margin improved from a deep negative -26.78% in 2020 to a less negative -7.69% in 2021, and transitioned to a positive 0.97% in 2022. This improvement was reversed in 2023 with a return to a negative margin of -5.57%, further declining to -10.54% in 2024. The negative margins in the latest periods indicate ongoing challenges in generating profitable returns relative to the capital employed.

Summary

Overall, while revenues experienced robust growth over most of the observed timeline, profitability as measured by economic profit and margin showed instability and a decline in the most recent periods. The transient positive economic profit in 2022 was not sustained, with a return to significant losses in 2023 and 2024. This pattern suggests that despite strong top-line performance, the company faced operational or capital efficiency challenges impacting its ability to generate economic value in the latter years.