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Tesla Reports Earnings Today: Is it all Gloomy for Investors?
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Tesla, Inc. (TSLA - Free Report) is set to report second-quarter results on Jul 24, after market close. Elon Musk’s electric car company has for quite some time indicated a loss in the quarter despite its decision to sell emission credits to moderate a negative bottom line. Though analysts now expect Tesla to report a loss of $1.55 per share in the second quarter, they believe the company might swing back to its winning ways in either the third or fourth quarter.
Barclays PLC (BCS - Free Report) , which has an underweight rating, also expects the company to report a loss of 16 cents per share for the second quarter. But, what’s behind Tesla’s drab earnings picture? Tesla’s cash-cow models such as Model S and Model X are currently seeing weakening demand and the less-pricey Model 3 isn’t living up to expectations.
Lest we forget, Model 3’s gross margin dropped slightly in the first quarter. Model 3 had to face numerous hurdles pertaining to the launch of the product overseas. Tesla had to market the car in new markets like China since almost everyone in the United States with a taste for a flashy electric vehicle has bought Model 3.
However, Tesla may see an improvement in its Model 3 gross margin in the second quarter. After all, the vehicle’s delivery has soared 52% recently to a new quarterly high of 77,550 units. Tesla further explained that “we made significant progress streamlining our global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to our working capital position.”
Thanks to such an optimistic view, analysts now expect Tesla to report second-quarter revenues of roughly $6.4 billion, much higher than $4 billion reported a year ago.
There is another positive factor that may help Tesla post an encouraging revenue number — its competitive relevance in the pick-up truck market. Upstart Rivian has attracted major funding from some of the coveted names in corporate America. While Amazon.com Inc. (AMZN - Free Report) is expected to invest $700 million, Ford Motor Co. (F - Free Report) will shell out another $500 million. In case of Ford, the key motivation to invest in Rivian is the vehicle’s separate electric motor for each wheel.
Still, the electric car maker’s cash and cash equivalent position is not in a good shape. A bond payment of nearly $920 million bond payment in the first quarter coupled with a number of vehicles remaining in transit mode continues to dent the company’s cash position. Needless to say, Tesla’s cash and cash equivalents have declined from $3.7 billion at the end of the fourth quarter of last year to $2.2 billion at the end of the first quarter.
As a result, the Zacks Rank #3 (Hold) company has an Earnings ESP of -25.00%. This is Zacks’ proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
At the same time, the Zacks Consensus Estimate for Tesla’s current-year earnings has trended downward over the past 60 days, as estimates slipped from a loss of 62 cents/share to a loss of $1.13/share right now.
Discouraging earnings performance, no doubt, will lead to a decline in the share price. Thus, the company’s expected earnings growth rate for the current year is a negative 15%. In fact, Tesla has underperformed the broader Automotive - Domestic industry so far this year (-21.8% vs +6.4%).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Tesla Reports Earnings Today: Is it all Gloomy for Investors?
Tesla, Inc. (TSLA - Free Report) is set to report second-quarter results on Jul 24, after market close. Elon Musk’s electric car company has for quite some time indicated a loss in the quarter despite its decision to sell emission credits to moderate a negative bottom line. Though analysts now expect Tesla to report a loss of $1.55 per share in the second quarter, they believe the company might swing back to its winning ways in either the third or fourth quarter.
Barclays PLC (BCS - Free Report) , which has an underweight rating, also expects the company to report a loss of 16 cents per share for the second quarter. But, what’s behind Tesla’s drab earnings picture? Tesla’s cash-cow models such as Model S and Model X are currently seeing weakening demand and the less-pricey Model 3 isn’t living up to expectations.
Lest we forget, Model 3’s gross margin dropped slightly in the first quarter. Model 3 had to face numerous hurdles pertaining to the launch of the product overseas. Tesla had to market the car in new markets like China since almost everyone in the United States with a taste for a flashy electric vehicle has bought Model 3.
However, Tesla may see an improvement in its Model 3 gross margin in the second quarter. After all, the vehicle’s delivery has soared 52% recently to a new quarterly high of 77,550 units. Tesla further explained that “we made significant progress streamlining our global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to our working capital position.”
Thanks to such an optimistic view, analysts now expect Tesla to report second-quarter revenues of roughly $6.4 billion, much higher than $4 billion reported a year ago.
There is another positive factor that may help Tesla post an encouraging revenue number — its competitive relevance in the pick-up truck market. Upstart Rivian has attracted major funding from some of the coveted names in corporate America. While Amazon.com Inc. (AMZN - Free Report) is expected to invest $700 million, Ford Motor Co. (F - Free Report) will shell out another $500 million. In case of Ford, the key motivation to invest in Rivian is the vehicle’s separate electric motor for each wheel.
Still, the electric car maker’s cash and cash equivalent position is not in a good shape. A bond payment of nearly $920 million bond payment in the first quarter coupled with a number of vehicles remaining in transit mode continues to dent the company’s cash position. Needless to say, Tesla’s cash and cash equivalents have declined from $3.7 billion at the end of the fourth quarter of last year to $2.2 billion at the end of the first quarter.
As a result, the Zacks Rank #3 (Hold) company has an Earnings ESP of -25.00%. This is Zacks’ proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tesla, Inc. Price and EPS Surprise
Tesla, Inc. price-eps-surprise | Tesla, Inc. Quote
At the same time, the Zacks Consensus Estimate for Tesla’s current-year earnings has trended downward over the past 60 days, as estimates slipped from a loss of 62 cents/share to a loss of $1.13/share right now.
Discouraging earnings performance, no doubt, will lead to a decline in the share price. Thus, the company’s expected earnings growth rate for the current year is a negative 15%. In fact, Tesla has underperformed the broader Automotive - Domestic industry so far this year (-21.8% vs +6.4%).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>