Tesla (NASDAQ: TSLA) is scheduled to report second quarter results after the bell on Wednesday, August 1.
It could be the much anticipated quarterly earnings report. Tesla Bears and Bullen – two vocal groups in sharp contrast to social media – are hoping for news that confirms their prejudices and pushes for a major price move.
Your modest fool does not quite fit in both categories. I've thought for years that Tesla's most bullish expectations are completely unrealistic and that the stock is overvalued. But I've also given the company enough credit to get it done in a brutal deal: Tesla may not dominate the car business, but it's harder than most investors.
If that more or less describes you, you're in the right place. Let's take a look at what to expect when Tesla reports, and the big questions that will (hopefully) be answered by Tesla's earnings report, at least for now.
Dive into Wall Street Expectations
Even Wall Street professionals have widely divergent views. The consensus reported by Thomson Reuters is that Tesla will report a loss of $ 2.81 per share on sales of $ 3.97 billion. A year ago, it lost $ 1.33 per share on $ 2.79 billion in revenue, suggesting that Tesla will post a much larger loss on significantly larger sales.
That Tesla's car sales have grown significantly a year ago is not really contentious: Tesla delivered 40,740 vehicles in the second quarter, down from 22,206 a year ago – a growth rate of 83%. However, estimates by individual analysts for sales range from $ 3.38 billion to $ 4.69 billion, with differences between average transaction prices and Tesla's probable revenues from energy storage and services expected
wide range , from a loss of just $ 1.71 per share to a steep $ 3.44. I suspect that the different views are the result of sharply divergent answers to a big question: how much did Tesla spend to remodel its Model 3 production line on the fly after its attempt at powerful automation failed?
Three things to watch out for
1. How much money does Tesla have left?
At the end of the first quarter, Tesla had $ 2.67 billion in cash and $ 653 million in claims – but it also had $ 2.6 billion in debt and another $ 1.9 Dollar billions of accumulated liabilities. (Think of the latter as bills that Tesla expects but has not yet received.) And $ 985 million of its cash came from customer deposits – many of which are repayable.
CEO Elon Musk confirmed During the first quarter profit head start in 2018 would be a priority. But while Tesla took several steps to save cash in the second quarter, including the dismissal of 9% of its workforce, it is likely that drastic changes were made to its model. 3 production lines consumed quite a bit of money.
How much money is left? The answer to this question could raise further, more difficult questions.
2. How many reservations and orders are there now for the Model 3?
By the end of the first quarter, Tesla said it had about 420,000 "net reservations" for the Model 3. Tesla delivered 18,440 model 3 units in the second quarter (and it probably produced about 15,000 more in July). However, some research has shown that a significant portion of model 3 reservation holders have requested reimbursements – possibly more than 20%. And it's by no means clear that Tesla has booked enough new Model 3 orders to make up for the cancellations.
Tesla is expected to announce the total number of "net reservations" for the Model 3 at the end of the second quarter. This number could be bullish if it appears that new orders outperform the cancellations – or bearish if they reveal a weak demand.
3. Will Tesla try to make more money this year
Musk has repeatedly said that he does not believe that Tesla will have to raise more money in 2018 – and he specifically said that he does not. wants to raise more money despite the fact that Tesla will receive some large debt repayments over the next nine months and it appears to be throttling future product development to save money.
Musk's restraint has led to some speculation in bearish quarters Tesla can not raise more money – that it could be blocked by regulators or banks demanding disclosures or conditions that Tesla does not want to meet.
Will Musk give in? Will Tesla explain why, despite a strong stock price, it has not yet raised money and what is obviously a need? The answers will be important.
The Result: What This Skeptical Fool Expects
What's worth is the modest assumption of your humble fool that Tesla's second quarter revenue is likely to be around $ 4 billion, in line with or slightly better than the Wall Street estimate, with about $ 3.4 billion of this revenue from the automotive industry. I expect Tesla to achieve good average transaction prices for all three models throughout the quarter, and that revenues from services and energy products are close to what they generated in the last quarter.
But I also think of these issues to the solution of Model 3, the production problems will be slightly higher than the average estimate. I think that, in turn, will make the loss of Tesla slightly larger than the consensus estimate of $ 2.90 per share.
Am I right? We will find out on Wednesday afternoon.