Tesla (TSLA): The Most Baffling Part of its Earnings Report

The future looked brighter for Tesla (TSLA) in June 2019.

Shares were just beginning to rally from a low of $180 to a high of $266.  Then earnings hit last night, and the stock has predictably turned course.   All as many analysts continue to raise red flags over the lack of margin and profits.  

Not only did the company report a loss of $1.12, as compared to expectations for 40 cents, but its revenue slumped to $6.35 billion, as compared to expectations for $6.41 billion.  Then, it reiterated its full-year delivery guidance, expecting to sell 360,000 to 400,000 cars this year.

However, analysts don’t believe in those projections at all.

In fact, many are honestly baffled by it altogether. 

“While demand showed an impressive bounce back this quarter and the company is seeing strong order activity for the third quarter, we continue to believe that the reiteration of 360k to 400k unit guidance for full-year 2019 was a head scratcher since the pure math and demand trajectory makes this an Everest-like uphill battle,” says Wedbush analysts, quoted by MarketWatch.

Analysts at RBC weren’t on board with the forecast either.

“We do not believe this is likely and model third-quarter deliveries -10% q/q, with the fourth-quarter back near second-quarter levels (total 2019 = ~339k),” said RBC. “As a result, we do not believe the next two quarters revenue will grow either from second-quarter levels or on a year-on-year basis. In fact, we don’t see revenue returning to near second-quarter levels.”

Analysts at Needham aren’t buying it either, noting they are cautious on the company’s ability to fulfill such lofty goals. They maintained their underperform rating, as a result due also in part to low margins, competitive threats, and the lack of sustained profitability.

In short, it may be a good idea to avoid TSLA until the smoke clears.  

Investors just sent the stock down $30 in pre-market on the day.