Tesla Motors (TSLA - Free Report) reported solid second-quarter results after the closing bell on Thursday, beating on revenue and earnings.
Adjusted loss per share came in at 16 cents per share in the quarter, narrower than the Zacks Consensus Estimate of loss of 24 cents. Revenues climbed 55.4% year over year to $858 million and was well ahead of the Zacks Consensus Estimate of $802 million.
The company delivered a record 7,579 Model S cars in the second quarter, slightly above its own expectation of 7,500 cars. It projects delivery of about 7,800 Model S cars in the third quarter and is on track for more than 35,000 deliveries this year (read: Strong US Car Sales, But Red Light Ahead for Auto ETF?).
The automaker is seeking to invest $750–$950 million this year to boost production capacity and build ‘gigafactory’ plants. This is up $100 million from the previous guidance. The company has broken ground on a site in Nevada for a planned battery factory, which may serve as the company's first gigafactory battery producing plant.
About 40–50% of the $4–$5 billion cost of building a gigafactory is expected to be funded by the company itself while the rest will come from outside. As such, Tesla recently entered into a partnership with Japanese electronics firm Panasonic to build cheap and more efficient electric fuel batteries. The company stated that Panasonic would fund about 30-40% while other small suppliers will fund about 10–20%.
Following the earnings announcement, Tesla had a roller coaster ride in after-market trading on Thursday and closed nearly flat on heavy volume. The shares are down nearly 4% in the early pre-opening trade today. The negative market sentiment could be due to the increased spending that might dilute the company’s profitability in the coming months.
The stock has a Zacks Rank #3 (Hold), signaling volatile trading in the days ahead (read: Alternative Energy ETF Investing 101).
ETFs in Focus
Given this, some of the ETFs having substantial allocation of this luxury carmaker would be in focus in the coming days. Investors should closely monitor the movement in these funds and grab opportunities from a rising stock price or avoid them if the stock drags them down:
Market Vectors Global Alternative Energy ETF ((GEX - Free Report) )
This ETF tracks the Ardour Global Index, focusing on global companies that are primarily engaged in the business of alternative energy. The fund holds about 31 stocks in its basket with AUM of $105 million while charging 62 bps in fees per year. Average daily volume is paltry at under 12,000 shares per day on average. Tesla occupies the top position in the basket with 11.09% allocation (see: all the Alternative Energy ETFs here).
From a sector perspective, industrials and information technology take the largest share with 39.7% and 36%, respectively, while consumer discretionary and utilities round off the next two spots with nearly 11% share each. In terms of country exposure, the fund is skewed toward the U.S. with 63% share while Denmark, China, Italy and many others receive minor allocations. The ETF lost about 8% over the past one month and has a Zacks ETF Rank of 4 or ‘Sell’ rating.
First Trust NASDAQ Clean Edge Green Energy Index Fund ((QCLN - Free Report) )
This fund tracks the Nasdaq Clean Edge Green Energy Index and manages assets worth $123.4 million. It charges 60 bps in fees per year while trades in volume of more than 139,000 shares per day suggesting a relatively tight bid/ask. In total, the product holds 50 U.S. securities in its basket with Tesla Motors taking the top spot at 8.48% (read: What is Behind the Recent Clean Energy ETF Surge?).
Technology firms dominate this ETF, accounting for over one-third of the assets while oil & gas, and industrials round off to the next two spots. QCLN was down over 7% in the past one month and has a Zacks ETF Rank of 3 or ‘Hold’ rating.
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