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Tesla (TSLA) Down 2.9% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Tesla (TSLA - Free Report) . Shares have lost about 2.9% 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 drivers.

Tesla Earnings and Revenues Miss Estimates in Q2

Tesla reported loss per share of $1.12 in second-quarter 2019, wider than the Zacks Consensus Estimate of loss of 54 cents. The company recorded loss of $3.06 per share in the prior-year quarter.

During the reported quarter, net loss attributable to common shareholders amounted $408.3 million compared with the year-ago net loss of $717.5 million.

Revenues increased to $6.35 billion from $4 billion registered in second-quarter 2018. However, the figure missed the Zacks Consensus Estimate of $6.38 billion.

During the quarter under review, Tesla reported record delivery of 95,356 vehicles and production of 87,048 units. This surpassed the previous records achieved in fourth-quarter 2018.

Total automotive revenues, including that from automotive sales and leasing, increased 60% year over year to $5.38 billion in the reported quarter.

Energy generation and storage revenues decreased from $374.4 million in second-quarter 2018 to $368.2 million in the reported quarter. Services and other revenues increased significantly year over year to $605.1 million.

Tesla’s second-quarter 2019 automotive gross margin was 18.9%, decreasing 168 basis points (bps) from second-quarter 2018.

Energy generation and storage gross margin decreased 20 bps to 11.6% on a year-over-year basis.

Financial Position

Tesla had cash and cash equivalents of $4.95 billion as of Jun 30, 2019, compared with $2.24 billion, as of Jun 30, 2018.

Net cash provided by operating activities amounted to $863.6 million in second-quarter 2019 compared with $129.7 million of net cash used in second-quarter 2018. Capital expenditure declined to $249.7 million from $609.8 million in the year-ago quarter.

Model 3 Update

In second-quarter 2019, Tesla reported record Model 3 delivery of 77,634. During the quarter, the production rate of Model 3 continued to improve. The company targets to produce 10,000 vehicles of each model by the end of 2019.

Outlook

Tesla is making efforts to raise vehicle deliveries. This is in sync with its previous delivery guidance of 360,000-400,000 vehicles in 2019. Importantly, the company expects positive quarterly free cash flow. It anticipates 2019 capital expenditure to be about $1.5-$2.0 billion, marking a reduction from the previous guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -13924.98% due to these changes.

VGM Scores

Currently, Tesla has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Tesla has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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