Tesla - Q2 earnings call - any surprises from Musk?

This week Tesla is set to report their second quarter earnings.

In their year end financials, Tesla posted a net loss of $2.24 billion and a further loss of $568 million was reported in Q1. The firm’s free cash flow reported last year was also a negative $4.1 billion.

CEO Elon Musk has been constantly repeating that the company will improve its cash figures and reach profitability by Q3 this year. In pursuit of profit, Telsa has cut back on capital expenditure projects and slashed 9% of its workforce. Most recently, the company has also been trying to squeeze cash out of suppliers retroactively.

One thing that comes to mind from last quarter’s call was Musk putting a bizarre and odd conference call in which he insulted analysts, the media, regulators and people who died behind the wheel of his car. He also ended up saying that if people are concerned about volatility, they should not invest in Tesla. This show together with negative results resulted in the stock price to lose over 5% in one trading day.

What are we to expect from the earnings call?

Apart from the CEO’s controversies with the media, we have interesting reports coming out about Model 3 sales and costs. Musk has also promised profit in the second half of the year.

Here’s what else to expect:

Earnings: Analysts polled by FactSet expect Tesla to report a second-quarter adjusted loss of $2.88 a share, compared with an adjusted loss of $1.33 in the second quarter of 2017.

Revenue: Analysts surveyed by FactSet expect sales to rise to $3.99 billion in the quarter, from $2.79 billion in the year-ago period.

Stock price: The stock is down 12% in July but up 7% for the quarter compared with advances of 4.8% and 2.3% for the S&P 500 index and the Dow Jones Industrial Average respectively.

So far this year, Tesla is down 7% whilst the S&P is up by 3% increase and the Dow is up by 0.6%. Over the last 12 months, the stock has lost 8% versus rises of 13% and 16% for the S&P and the Dow respectively.

Tesla is also about 22% off its record close of $385 on Sept. 18.

The below chart shows the stock price movement in a single trading session following the earnings report. As we can see, from the last eight reports five have been ‘red’ days with stock price down between 5 to 8.5% compared to only three times when we had positive days.

2 - Comments

Filippo Cova - 08 agosto 15:40 Reply

Hi Christina, what do you think about Musk considering taking Tesla private?

Thanks for your reply!

Christian Buhagiar - 08 agosto 16:11 Reply

Hi Filippo thanks for your comment..

I actually did an article on that today :

I think he is running out of options for this firm...Tesla has been constantly loosing out money and although it has a good/innovative product, it is now structured like for instance BMW or Mercedes who are also now evolving slowly in the electric car sector and therefore taking more market share from Tesla.

A lot of traders I think are short Tesla so for sure until we reach the famous $420 we will be seeing a lot of volatility..something which I will want to avoid :)