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Tesla (TSLA) Down 13.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Tesla (TSLA - Free Report) . Shares have lost about 13.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Tesla due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Tesla's Q2 Earnings Miss Estimates, Revenues Beat

Tesla has incurred adjusted loss of $3.06 per share in second-quarter 2018, wider than the Zacks Consensus Estimate of loss of $2.78. The company reported loss of $1.33 per share in the prior-year quarter.

The reported net loss in the quarter under review was $742.7 million compared with the year-ago net loss of $401.4 million.

Revenues increased to $4 billion from $2.8 billion registered in second-quarter 2017. The figure surpassed the Zacks Consensus Estimate of $3.8 billion.

Tesla produced 53,339 vehicles in second-quarter 2018. Moreover, the company delivered 22,319 Model S and Model X vehicles, and 18,449 Model 3 vehicles, totaling 40,768 deliveries.

Total automotive revenues, including revenues from automotive sales and leasing, increased 47% year over year to $3.36 billion in the reported quarter. The rise was due to Model 3 deliveries.

Energy generation and storage revenues soared from $286.8 million in second-quarter 2017 to $374.4 million in the reported quarter. The rise was mainly due to considerable growth of energy-storage deployments.

Services and other revenues increased 25% year over year, primarily due to higher used-car sales.

Tesla’s second-quarter 2018 automotive gross margin was 20.6%, declining 735 basis points (bps) from second-quarter 2017.

Energy generation and storage gross margin declined 1,716 bps on a year-over-year basis to 11.8%.

Financial Position

Tesla had cash and cash equivalents of $2.24 billion as of Jun 30, 2018, compared with $3.37 billion, as of Dec 31, 2017.

Net cash used in operating activities amounted to $129.7 million in second-quarter 2018 compared with net cash used of $200.2 million in second-quarter 2017. Capital expenditure declined to $609.8 million from $959.1 million in the year-ago quarter.

Business Expansion

In second-quarter 2018, Tesla opened eight new stores and service locations. The company also opened 103 new supercharger locations, reaching the global total of 1,308.

Model 3 Update

The company roughly produced 7,000 Model 3, Model S and Model X vehicles in the last week of June. In July, the company repeatedly produced 5,000 Model 3 cars, while producing 2,000 Model S and Model X vehicles per week as well. After achieving the weekly target of 5,000 Model 3 car production, Tesla is now aiming to produce 6,000 Model 3 vehicles per week by late August.


Outlook

The company expects to produce 50,000-55,000 Model 3 vehicles in third-quarter 2018, marking an increase of 75-92% from the prior quarter. Model 3 gross margin is likely to increase to around 15% in the third quarter and 20% in the fourth quarter, due to an improving mix and a decline in manufacturing costs.

Tesla expects to deliver around 100,000 units of Model S and Model X in 2018, similar to the prior-quarter guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Tesla has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tesla has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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