Investor's Corner
Tesla’s Q1 2018 financial results and earnings call: what to expect
Tesla’s first-quarter financial results are set to be released after the closing bell on Wednesday, and expectations are high that the electric car and energy company would be posting some of its most extreme numbers to date. Here are our expectations for Tesla’s upcoming Q1 2018 financial report and earnings call.
Revenue
According to Tesla, it was able to deliver 29,980 vehicles to customers in Q1 2018 — comprised of 11,730 Model S, 10,070 Model X, and 8,180 Model 3 — a figure that is comparable to the numbers the company posted for Q4 2017.
Considering that the lower-priced Model 3 accounted for a large fraction of the company’s electric car sales in the first quarter, revenue for Q1 2018 is expected to remain flat or even lower compared to the previous quarter.
Tesla’s Q1 2018 revenue would likely be somewhere in the $3.2 billion range, slightly down from the $3.3 billion it posted in Q4 2017, or an increase of roughly $500 million over revenue from one year prior.
Operating Losses and Gross Margins
While Tesla’s year-on-year revenue growth would likely be considerable, expectations are high that the company’s operating losses this quarter would hit new records. Tesla posted a $600 million loss for Q4 2017, and that number could easily get higher for the first quarter of 2018, considering the continued investment on the Model 3’s production ramp. Thus, an operating loss in the $700 million level would not be out of the picture for Q1. The electric car maker is also expected to post a $4.01 loss per share for the first quarter.
Over the past couple of quarters, Tesla’s gross margins have gone down from the mid-20% level to sub-15% levels. The same downward trend could be present in Q1 2018 as well, due to upfront investments in the Model 3 line that won’t really pay off until the car’s production reaches economies of scale.
As Model 3 production continues to close in on its goals, Tesla’s gross margins will likely see an improvement. If the company does manage to hit its target of manufacturing 5,000 Model 3 a week by the end of Q2 2018, Elon Musk’s prediction that the company will be profitable by Q3 or Q4 2018 might actually come true.
Tesla Energy
Tesla is also expected to post revenue figures for its energy projects. If any, the company’s earnings from its battery storage and solar business will be a good guideline on Tesla Energy’s organic growth since the company acquired SolarCity back in 2016. Profits from Tesla’s massive South Australia Powerpack farm could also be revealed by the company.
Model Y and Tesla Semi
While the upcoming Q1 financial results and earnings call would likely focus on the company’s numbers related to the Model 3 ramp, there is also a good chance that Tesla would provide some updates on the facilities that would support the manufacture of the Model Y and the Tesla Semi — two upcoming vehicles that are expected to start production next year.
Tesla will be posting its Q1 2018 financial results after the market closes on Wednesday, May 2, 2018, followed by a live Q&A session at 2:30 p.m. PST (5:30 p.m. EST).
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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