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The Avita Medical Inc (ASX: AVH) share price has lost more than 60% over one year, despite the company showing growth and delivering record revenues in FY20.

Is the Avita share price a good buy at this level, and what of its prospects for 2021?

First, the numbers…

Avita is currently a loss-making company. It posted a record full-year revenue of $14.3 million in FY20, which translated to a bottom line loss of $43 million. 

Revenue has kept growing however, with the company reporting a first-quarter FY21 revenue of $US5 million, a 59% increase over the same quarter prior year.

Avita is also in a healthy financial position, and held US$66 million in cash and no debt as at 30 September.

The RECELL flagship product

The company’s business revolves around the rollout of its RECELL technology product in the United States.

RECELL basically aims to replace the traditional skin graft procedure in patients with burns injury. 

The device helps surgeons use a small sample of a patient’s own skin to produce a suspension of spray-on skin cells, which can then be applied to a patient’s burn site in as little as 30 minutes to regenerate a new outer layer of skin.

The procedure uses less than 5% of the size normally required in a graft, and has been clinically demonstrated to heal the burn site as effectively as a skin graft.

The technology was invented by an Australian doctor, Fiona Wood, who used the product in an experimental capacity when treating the victims of the Bali bombings in 2002.

However, it wasn’t mass-commercialised until recently, when the company obtained Food and Drug Administration (FDA) approval in the US in 2018, with first launch only in 2019.

Target market and size

RECELL’s current target market is concentrated in the 134 burn centres in the US, with approximately 14,000 adults with second or third degree burns treated at those burn centres each year.

Despite being approved in Europe, China, and Australia, Avita is not actively selling into these markets – preferring to focus on a roll-out in the US over the next 18 months.

However, in Japan the company is expected to launch in fiscal 2022, with the market size in that country approximately at 6,000 burn victims per year.

Future prospects

Although the current US approval of the RECELL system is limited to adult burn wounds, the applications could be much broader.

Clinical trials are currently under way for RECELL to be used outside burn centres – including for general cosmetic surgery, soft-tissue reconstruction, and paediatrics use.

This gives the company a good tailwind for future revenues.

However , there are other competitive products in burns care in the market, including NovoSorb made by Polynovo Ltd (ASX: PNV).

About the Avita share price

As mentioned, the Avita share price has lost about 60% over the year. The company is dual listed on the Nasdaq.

With the possibilities of the RECELL product just explained and clinical trails under way, who knows where the share price will go to in 2021.

At the time of writing, Avita’s share price is almost unchanged for the day at $4.94. The company commands a market cap of $330 million.

More reading

• Why AVITA, IDP Education, Over the Wire, & Viva Energy shares are dropping lower
• 7 top ASX biomedical shares in 2020
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: ASX hits new post-March high

Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited and POLYNOVO FPO. The Motley Fool Australia has recommended Avita Medical Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you thought COVID‐19 was “so 2020”, think again as the Sonic Healthcare Limited (ASX: SHL) share price surged higher on the first trading day of the New Year.

The SHL share price jumped 3.6% to $33.33 in morning trade. This makes the medical diagnostics group the top performer on the S&P/ASX 200 Index (Index:^AXJO).

In case you were wondering, the Pro Medicus Limited (ASX: PME) share price and Evolution Mining Ltd (ASX: EVN) share price are in second and third spots, respectively.

COVID testing blitz boosts SHL share price

Interest in Sonic Healthcare is probably given a boost by the new COVID outbreak in Sydney leading up to Christmas.

While authorities are doing a commendable job in suppressing the outbreak, the virus has spread to neighbouring Victoria. The list of “hotspots” in both states are also growing and governments in both states are urging residents to get tested.

Pressure builds to boost testing rates

The number of tests done in New South Wales in the last 24 hours stands at 22,275. Deputy Premier John Barilaro says testing rates are too low and he wants this to increase to as much as 50,000 a day, reported the Australian Financial Review.

Testing capacity at Victoria is also being ramped up with many turned away after waiting in line for hours to get a test.

There is a very real chance that other states will be joining the rush to test residents.

Rush for testing sites could spread

Queensland Health detected traces of COVID-19 at two more sites in South East Queensland on New Year’s Eve.

The new sites are Bundamba in West Moreton and Merrimac on the Gold Coast. Wastewater tests last week also revealed positive results at seven sites across the state. These include Victoria Point, Oxley Creek, Goodna, Fairfield, Cairns North, Redcliffe and Nambour.

The only way for authorities to get on top of the COVID outbreak is to undertake mass testing. This should be good news for Sonic Healthcare as its labs are among the facilities used by state governments.

Sonic Healthcare benefits from COVID tests

Sonic also undertakes testing in other countries, including the United States. Global cases of COVID-19 have continued to soar despite the approval and roll-out of a vaccination program.

The Sonic Healthcare share price actually came under pressure on the vaccine news as many assumed the number of tests would fall significantly as the vaccinations in the US and UK commenced.

But the number of shots administered are much smaller than originally forecasts and it seems like the naysayers were wrong in their bearish assumptions.

Foolish takeaway

On the flipside, the surge in COVID testing could be a double-edged sword for Sonic. Other routine tests that it usually undertakes will have to make way for the deadly pandemic.

Nonetheless, Sonic is still seen to be better placed to benefit from the fresh COVID outbreak than its peers, like hospital operator Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) and drug developer CSL Limited (ASX: CSL).

More reading

• Disappointments from the ASX 200’s best ever December quarter
• 2 ASX blue chip shares tipped as buys for 2021
• Top ASX shares to buy in January 2021
• Here’s how the S&P/ASX All Technology Index fared in 2020
• What happened to the CSL (ASX:CSL) share price in 2020?

Brendon Lau owns shares of CSL Ltd. and Evolution Mining Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the year on a high. The benchmark index is up 0.9% to 6,645.4 points at the time of writing.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Corporate Travel Management Ltd (ASX: CTD)

The Corporate Travel Management share price is down 2.5% to $17.06. Investors have been selling this corporate travel booking company’s shares after COVID-19 spread from New South Wales and into Victoria. This has sparked concerns that the domestic travel market recovery could take longer than expected. In addition, rising cases in Europe and the United States is impacting investor sentiment.

Link Administration Holdings Ltd (ASX: LNK)

The Link share price has sunk almost 13% lower to $4.84 after providing an update on a takeover approach by SS&C Technology Holdings. Last month the NASDAQ listed global provider of investment and financial software made a conditional offer of $5.65 per share to acquire 100% of Link. While management felt the offer undervalued the company, it granted SS&C Technology due diligence. However, this morning it revealed that the takeover proposal has now been withdrawn. 

Strike Energy Ltd (ASX: STX)

The Strike Energy share price is down 3.5% to 27 cents following an update on its West Erregulla operations. According to the release, an unexpected significantly over-pressured gas column has been intercepted. As this has the potential to exceed the current design tolerance of its existing well, the company has suspended drilling while additional engineering is undertaken.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price is down 1% to $6.33. This also appears to be due to concerns over the recovery of the domestic travel market. With Victoria closing its border to New South Wales, Australia’s busiest travel route will be largely out of action for the near term.

More reading

• Why the Link (ASX:LNK) share price is dropping 11% lower today
• The ASX sectors hardest hit by COVID-19 in 2020
• Here’s how the S&P/ASX All Technology Index fared in 2020
• Why BetMakers, Flight Centre, Monash IVF, & Sydney Airport are dropping lower
• Top fundie names these 2 ASX shares as buys

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Link Administration Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Infratil Ltd (ASX: IFT) share price is lifting this morning after the company released an update on the valuation of its investment in Canberra Data Centres (CDC).

At the time of writing, the Infratil share price is trading up 1.8% at $7.04.

Increase in demand driving value

After the independent valuation, Infratil’s 48.1% investment in CDC is now valued at between $2,039 million to $2,334 million, as at the end of December 2020. This is a substantial increase from the previous valuation in September, ranging between $1,597 million to $1,807 million.

The nearly 28% uplift in value, from the bottom end of valuer estimates, is reportedly a result of accelerated demand in both new and existing customers for its data centre services. This surprise uptake has the company expecting existing data centres to reach capacity sooner than first thought.

Infratil said it would provide further details of CDC’s growth plans at the company’s investor day on 16 February.

The price for performance

The New Zealand-based infrastructure investment company implements an incentive model. The fee payable by Infratil acts as a monetary reward to the entities for delivering growth in the value of the investment.

The revised value of its CDC investment is expected to increase the international portfolio annual incentive fee (IPAIF) to $147.6 million. This is up from $57.7 million since the provided September estimate.

Infratil noted that it has not assessed incentive fees since September in regards to other investments.  These investments include Tilt Renewables Ltd (ASX: TLT), Longroad Energy, Retire Australia, and Australian Social Infrastructure Partners.

The final IPAIF will be payable to investments on 31 March 2021.

What’s next?

The Infratil share price has performed solidly over the last year, returning 39.9% in the last 12 months. This compares to the S&P/ASX 200 Index (ASX: XJO) which fell 2.17%.

The company performance has not gone unrecognised either – with AustralianSuper lobbying a takeover bid back in early December. This offer was rejected by the board, as they believed it undervalued the high quality and unique portfolio of assets.

Infratil expects it will conclude its strategic review of its investment of Tilt Renewables within the next 6 months. The company conveyed the potential of divestment of the renewable energy provider back in December.

More reading

• Here’s how ASX renewable energy shares have performed in 2020
• ASX 200 up again on Wednesday
• Infratil (ASX:IFT) share price on watch after rejecting AustralianSuper takeover approach
• Why the Infratil (ASX:IFT) share price rocketed 21% higher today
• ASX stock of the day: Tilt (ASX:TLT) share price rockets 17% to new all-time high

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The NEXTDC Ltd (ASX: NXT) share price was in sensational form in 2020 and was one of the best performers on the S&P/ASX 200 Index (ASX: XJO).

The data centre services company’s shares recorded a gain of 86% over the 12 months.

This compares to a 1.4% decline by the benchmark index.

Why did the NEXTDC share price smash the market in 2020?

There were a few catalysts for NEXTDC’s strong share price gain in 2020. Chief among them was the COVID-19 pandemic accelerating the structural shift to the cloud.

With more and more businesses embracing cloud-based solutions, demand for capacity in data centres increased materially.

So much so, NEXTDC was forced to bring forward development plans in order to keep up with demand.

This strong demand underpinned a 33% or 17.4MW increase in contracted utilisation to 70MW in FY 2020.

And although billing hasn’t commenced for all of this utilisation, it didn’t stop NEXTDC from delivering impressive financial results for the 12 months.

NEXTDC reported a 14% increase in revenue to $205.2 million and a 23% lift in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $104.6 million. The latter was at the top end of its guidance range.

What about FY 2021?

The good news is that demand remains strong and another stellar result is expected in FY 2021.

NEXTDC is expecting data centre services revenue of $242 million to $250 million, which will be up 21% to 25% on FY 2020. Management notes that this will be driven by strong growth in recurring data centre services revenue, supported by long-term customer contracts. Furthermore, space is now available at the S2 data centre to drive further enterprise and network opportunities.

Management is also forecasting its earnings to grow at a similar rate. It provided guidance for underlying EBITDA of $125 million to $130 million in FY 2021. This will be up 20% to 24% on FY 2020’s EBITDA.

It notes that its second generation facility performance is driving scale and earnings growth and operational excellence continues to deliver efficiencies in energy management and purchasing.

This could yet be boosted by a potential international expansion. NEXTDC recently opened offices in Singapore and Tokyo with a view for expanding into these markets in the future.

Can the NEXTDC share price go higher?

Analysts at Goldman Sachs believe NEXTDC’s shares can still go higher from here.

They currently have a buy rating and $13.20 price target on its shares. This compares to the current NEXTDC share price of $12.20.

In addition to this, the broker has suggested that its shares could be worth $20.00 based on assumptions that are high, but “not unrealistic considering the current acceleration in demand that is evident across the business.”

More reading

• Here’s how the S&P/ASX All Technology Index fared in 2020
• Why the NEXTDC (ASX:NXT) share price is up 85% in 2020
• 2 ASX tech shares to buy and hold until 2030
• 5 fantastic ASX shares to buy in 2021
• 2 outstanding ASX shares to buy and hold for a decade

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Emerge Gaming Ltd (ASX: EM1) share price has started 2021 with a bang.

The esports and gaming technology company’s shares were up 33% to 10.5 cents in morning trade.

Why is the Emerge Gaming share price rocketing higher?

Investors have been buying the company’s shares this morning following the release of an update on its MIGGSTER social gaming platform.

According to the release, Emerge Gaming has banked its first cash receipts from the social gaming platform to the value of A$8.3 million.

The MIGGSTER platform was launched on 14 November 2020 and the first cash receipts represent gross subscription fees received by Emerge in the 48 days since its launch date.

Management also advised that MIGGSTER subscriptions continue to deliver strong daily growth and further material updates will be provided to the market as they transpire.

What are gross subscription fees?

Due to its revenue sharing with Influence Crowd Technologies (formerly known as Tecnología de Impacto Multiple or TIM), not all subscription fees are received by Emerge Gaming.

Management has attempted to clarify the situation by providing a breakdown on how its agreement with Influence Crowd Technologies works.

It explained that the MIGGSTER platform is operated under a licensing agreement with Influence Crowd Technologies to market Emerge’s proprietary tournament platform technology into an affiliate sales network under a white-labelled brand.

“Under the licencing agreement, Emerge will earn 64.5% of the Net Revenue from the platform where Net Revenue is determined as gross subscriptions received less direct taxes and other directly attributable platform costs,” it commented.

Why has its partner changed its name?

No details were provided to explain why Tecnología de Impacto Multiple (TIM) has changed its name to Influence Crowd Technologies.

However, it is worth noting that there has been negative coverage of TIM in the past due to its connections to companies that have been flagged for using questionable business practices.

More reading

• ASX stock of the day: Emerge Gaming (ASX:EM1) shares rocket more than 20%
• Why Emerge Gaming, Flight Centre, Medical Dev International, & Tyro shares are dropping lower
• The Emerge Gaming (ASX:EM1) share price is on a rollercoaster ride today
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• Why the Emerge Gaming (ASX:EM1) share price crashed 50% lower today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Clean TeQ Holdings Limited (ASX: CLQ) shares have risen by 6% in early morning trading, after the company announced it has secured two new additional water purification contracts in Queensland and Oman. At the time of writing, the Clean TeQ share price is trading up by 1.5 cents to 26.5 cents.

Queensland contract

The Clean TeQ share price is surging higher today after the company reported it has won a competitive tender. In its announcement, Clean TeQ advised it has been awarded a contract valued at over $2 million by the Mackay Regional Council for the upgrade of a bore water treatment plant at Koumala.

In this agreement, Clean TeQ will design, supply, and install an ion exchange treatment to remove hardness and lower the salinity of an existing bore water supply.

This is done in order to reduce the scaling of pipes, and improve taste for use in the potable water supply of Koumala.

Clean TeQ will manage the full design, procurement, construction and commissioning of the plant including subcontracting of civil works.

The program of works is scheduled to commence in the first quarter of 2021, and run through to the end of the year.

Oman contract

In late 2019, Clean TeQ was was engaged by Multotec, the company’s sales and delivery partner in Africa, to deliver a waste water treatment system at an antimony processing facility in Oman.

The company’s DESLAX technology was used in this project to remove a range of deleterious elements from up to 200 tonnes of waste water per day.

By treating the waste, the customer is able to recycle a significant proportion of the water for re-use in its processing plant, rather than disposing of it.

This provides a valuable cost saving for the customer in a geographic location where water is relatively scarce.

In today’s announcement, Clean TeQ advised it has been awarded a contract to undertake the detailed design for an upgrade of this water treatment plant.

The upgrade will focus on neutralising the waste liquors, and precipitating contaminants for easier recovery.

Management reaction

Clean TeQ Managing Director and CEO Sam Riggall was pleased with the contract wins, saying:

Our water business continues to build on the successes achieved over the past year. Having demonstrated our capability in designing, constructing and commissioning our highly effective proprietary water purification systems in a range of different applications, our focus is now shifting towards revenue growth.

More about Clean TeQ

Based in Melbourne, Clean TeQ Holdings provides services in metals recovery and industrial water treatment. The company applies its proprietary continuous ion exchange technology via its wholly owned subsidiary, Clean TeQ Water.

Clean TeQ also owns 100% of the Clean TeQ Sunrise Project in New South Wales. The company counts this among the largest cobalt deposits outside of Africa. It also has some of the largest and highest-grade accumulations of scandium on the planet.

About the Clean TeQ share price

The Clean TeQ share price has risen by around 20% over the past year. Clean TeQ shares dipped by as much as 45% in March 2020, before recovering to their current levels.

Based on the current Clean TeQ share price, the company commands a market capitalisation of $202 million.

More reading

• Why the DroneShield (ASX:DRO) share price is surging higher
• Here’s why the InvoCare (ASX:IVC) share price is on the rise today
• Why the Link (ASX:LNK) share price is dropping 11% lower today
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The DroneShield Ltd (ASX: DRO) share price is running hot today following the company’s record quarterly results.

At the time of writing, the defence contractors’ shares are up 5.8% to 18 cents. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.1% to 6,856 points.

Quick take on DroneShield

DroneShield is a global leader in drone security technology. The company designs and develops detection systems that use specialised technology to protect people, organisations and critical infrastructure.

Its multi-layered products are centred around on detection and disruption from unmanned aerial systems (UAS).

What did DroneShield announce?

In this morning’s ASX release, DroneShield advised that it has achieved a record fourth quarter in cash receipts.

For the three months ending 31 December, the company collected around $2.1 million from purchases in relation to its counter-UAS technology. In addition, DroneShield was awarded $250,000 in grants during the period, bringing the total to $2.4 million received.

The company will release further information about its quarterly results before the end of the month.

DroneShield CEO Oleg Vornik welcomed the results, saying:

The record quarterly receipts consisted of a wide geographic range of customers, including the Five Eyes countries and a number of others.

Our global model continues to ramp up as defence customers increase their spending, despite the COVID environment. The quarterly receipts also include both first time and repeat orders. Importantly, both our near-term pipeline and the manufacturing order book are at an all-time high.

DroneShield share price snapshot

Over the past 12 months, the DroneShield share price has faulted, sending shareholders returns to a loss of 37%. The company’s shares hit an all-time low of 8.4 cents in March last year from COVID-19 impacts.

Since then, the DroneShield share price has moved higher, but is still a long way off its 52-week high of 30 cents.

More reading

• Here are the best All Ordinaries performers of 2020
• How does fiscal stimulus impact ASX share prices?
• Why the New Energy Solar (ASX:NEW) share price is climbing higher today
• As we bid farewell to 2020, don’t miss this lesson…
• Why the DroneShield (ASX:DRO) share price is jumping 6% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The InvoCare Limited (ASX: IVC) share price is on the move on Monday following the release of an announcement.

In morning trade the funeral company’s shares are up 1% to $11.56.

What did InvoCare announce?

This morning InvoCare provided an update on the appointment of its new Chief Executive Officer, Olivier Chretien.

According to the release, Mr Chretien has now been formally appointed to the board of InvoCare effective 4 January 2021.

This follows the resignation of former Chief Executive Officer, Martin Earp, as a director of InvoCare this morning as planned.

Mr Earp will continue to work with the board and Mr Chretien up to the end of March 2021. The company expects this to deliver a smooth and seamless handover of leadership.

Who is the company’s new CEO?

Olivier Chretien was named the company’s new CEO just before Christmas following a six-month search for a replacement for the outgoing Martin Earp. The latter revealed in June that he would not be staying on when his six-year contract ends in March 2021.

Mr Chretien is an experienced executive and has previously worked for private hospital operator Ramsay Health Care Limited (ASX: RHC) and conglomerate Wesfarmers Ltd (ASX: WES). His most recent role was Group Chief Strategy Officer at Ramsay Health Care.

Prior to joining Ramsay, he served in a range of senior executive and managing director roles at Wesfarmers between 2006 and 2017.

Commenting on the appointment, InvoCare’s Chair, Bart Vogel, said: “Olivier has a proven record with successful P&L management, value creation, strategy design and execution in those roles over many years. Olivier’s record demonstrates strategic execution and financial acumen, combined with successful management of operational transformation and a clear grasp of trends driving business disruption across all sectors, particularly in digital and data.”

“This combination of strategic and management execution to create value, together with strong people skills is critical to InvoCare’s investment program and operations as we address changing customer expectations and further diversify earnings into adjacencies,” he added.

Mr Chretien appears to be up for the challenge of leading the company.

He commented: “I am inspired by the Company’s mission and values and the critical role it plays in celebrating life and memories for its client families, through dedicated team members who bring uniquely empathetic skills to work every day.”

“I am committed to develop with the team an even more resilient and innovative business to ultimately deliver solid and sustainable returns to our shareholders by leveraging the foundations built over the past few years,” he concluded.

More reading

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• These are the 10 most shorted shares on the ASX

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended InvoCare Limited and Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

When Tesla Inc (NASDAQ: TSLA) first started 2020, the electric car company told investors it expected to deliver 500,000 vehicles or more this year. Of course, this guidance came before Tesla knew a global pandemic would hit — one that would lead to a pause in production at its factories and weakened demand around the world for new cars. As Tesla faced these challenging times earlier this year, management pulled its forecast for half a million deliveries.

Yet here we are at the end of 2020, and Tesla is announcing that it basically achieved its initial pre-pandemic target. The company delivered 499,550 vehicles in 2020, up from about 368,000 in 2019.

Staggering growth

Tesla’s record fourth quarter deliveries highlight an impressive growth trajectory for the automaker. Full-year 2020 deliveries rose 36% year over year. Even more, fourth quarter deliveries were up 61% year over year and 29% sequentially. 

While Tesla did eventually reinstate its target for 500,000 deliveries after a strong second quarter, management made it clear at the time that achieving this goal wasn’t in the bag. Even in Tesla’s third quarter shareholder letter, management was still saying that hitting its target would be “difficult.” It would depend “primarily on quarter over quarter increases in Model Y and Shanghai production, as well as further improvements in logistics and delivery efficiency at higher volume levels.”

While Tesla’s 499,550 vehicle deliveries technically fall just shy of its 500,000 target, they are close enough to highlight Tesla’s staggering growth and to suggest that the electric car maker was able to achieve some of the improvements in logistics and delivery efficiency at higher volumes that it was aiming for.

How Tesla got to half a million deliveries

Tesla’s achievement of nearly half a million vehicle deliveries in 2020 was fueled primarily by continued growth in sales of its lower-priced models. Combined Model 3 and Y deliveries in 2020 were 442,511, or about 85% of total deliveries. The remaining deliveries were Model S and X vehicles — the company’s flagship sedan and SUV.

For the fourth quarter specifically, combined Model 3 and Y deliveries were 161,650, or about 90% of deliveries. Combined Model S and X deliveries were 18,920.

Though Tesla doesn’t break down its Model 3 and Y deliveries by model, Model Y likely played an integral role in the company’s growth this year. Tesla has been very optimistic about the new vehicle, with management implying that the small SUV’s production and delivery volumes have the potential to ramp up enough to exceed Tesla’s best-selling car: Model 3.

Tesla is certainly investing heavily in Model Y production. As of Tesla’s third quarter shareholder letter, the company had a Model Y production line at its factory in Fremont, California, and it had more production lines for the vehicle under construction at three other factories.

In 2021, investors are likely expecting another year of sharp growth in vehicle deliveries from Tesla. The company has been aggressively expanding its vehicle production capacity, setting up the auto manufacturer well for continued robust growth throughout the year.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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