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Tesla stock (TSLA) one week after Q2 2016 Report

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Nashville, TN Tesla Service Center
Photo: Tesla Service Center in Nashville, TN

Post Q2 Report Action

As we previously reported, the Q2 quarterly results were “mixed”:

  • Revenue matched expectation, a positive for Wall Street;
  • Earning losses were higher than anticipated, a negative, but for a company like Tesla, where the stock price is based on future expectations, the earning numbers are really not what counts;
  • Slightly increasing gross margins, a positive;
  • Practically zero ZEV credits for the quarter, a negative;
  • Production and demand on track to support 50,000 deliveries in 2H 2016, a positive;
  • Lower production numbers than previously anticipated, a negative.

When you have such a mix of positives and negatives, it is fairly normal for traders to have a “subdued” response, unlike the usually wild responses to results that are big misses or big beats on expectations.

Accordingly, this time around the technical response of the stock market to last week’s Tesla Q2 2016 report has been “muted.” The stock has been in “compression” (a horizontal back and forth) since the report, staying in the $225-$230 range, but overall 12-month Analyst Price Targets have actually decreased with the average dropping from $277 to $244.

Looking at more details of the reactions to the report, this is a small sample from Top Analysts, noting that none of them changed their position.

Alexander Potter of Piper Jaffray says “Teslas untouchable brand helps investors look past million-dollar losses.”

“It’s hard to recommend a cash-burning company with such an uncertain outlook,” said Potter, who reiterated a neutral rating and $223 price target on the stock. But consumers and investors still seem captivated by Tesla’s products, said Potter. And as long as the company “retains this aura,” its stock multiple will “probably stay buoyant,” he said.

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Brad Erickson of Pacific Crest says “The risks still outweigh the rewards.”

“Brad rattled off a number of challenges Tesla still needs to tackle in a note to clients. But he reiterated a sector weight rating on the stock, said Tesla’s cash burn wasn’t as bad as expected during the quarter, and maintained the belief that the company’s longer-term vision is “second to none.”

Ben Kallo of Robert W. Baird says “Focus [is] on Tesla (TSLA) Production Ramp and Long Term Goals, Not Q2 Miss.”

Kallo commented, “Q2 revenue was in line with our estimate, but TSLA missed on EPS with higher-than-expected OPEX. Additionally, gross margin missed consensus estimates and was pressured during the quarter with the Model S refresh and X ramp, but automotive gross margin improved sequentially, which was better than we expected. Importantly, TSLA reaffirmed its 2H:16 delivery target of ~50k vehicles, expects margins to ramp in 2H:16 given higher manufacturing efficiency, and the Model 3 remains on track for 2H:17 production.”

Kallo also covers SolarCity (SCTY) and he commented that “Although SCTY has a 45-day go-shop period which could provide additional upside, we believe it is highly likely the TSLA and SCTY merger will go through, and we are moving to the sidelines.”

Colin Rusch of Oppenheimer “noted that Tesla appears to be taking on increasing responsibility when it comes to technology development.”

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“Rusch wasn’t surprised by Tesla’s quarter, and the firm remains on the sidelines until Tesla can show some progress toward profitability. It also appears to have taken a hard line with suppliers on timelines, pricing and allocation of resources,” he explained. “While we see potential benefits, we note increasing risk on supplier pushback.”

Ryan Brinkman of J.P. Morgan noted that “JPMorgan cuts Tesla estimates on higher operating expenses.”

“To reflect lower revenue and higher operating expenses following the company’s Q2 results, Brinkman cut his 2016 earnings per share estimate for Tesla to (32c) from $1.60. The analyst notes his 2016 earnings estimate was $4.62 a year ago and $2.74 at the start of this year. This reflects the “degree of consistent ratcheting down of near-term earnings,” Brinkman tells investors in a post-earnings research note. The analyst keeps an Underweight rating on Tesla with a $180 price target.”

Shelby Seyrafi of FBN Securities “reiterated a Buy rating on Tesla Motors (NASDAQ: TSLA), with a price target of $275.”

Seyrafi is a 3-star analyst with an average return of 0.5% and a 51.5% success rate. Seyrafi covers the Technology sector, focusing on stocks such as Hewlett Packard Enterprise, Dot Hill Systems Corp., and Concur Technologies.

Colin Langan of UBS, says “Tesla, SolarCity synergies still cloudy.”

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“Colin noted Tesla announced details of its agreement to acquire SolarCity (SCTY) and provided synergy targets with the deal. UBS said they remain cautious on the deal given the lack of compelling synergies and the fact the deal is an unneeded distraction for Tesla management, which already faces challenges with its Model 3 launch and production targets. UBS maintained its Sell rating and $160 price target on Tesla shares.”

The overall consensus of analysts covering Tesl Motors, reported at tipranks.com, is neutral (hold).

Source: TipRanks

Source: TipRanks

Trade Analysis

Quarterly Reports are usually the catalyst that start or stop actions for swing traders. The Q2 report was no different. I called for a bullish swing trade when the MACD crossed to the bulls on July 1st. The trade closed on August 4th when the MACD crossed to the bears, the day after the Q2 report was released. This was a good trade that gained over $14 in about a month period to traders that went long on the stock (see the shaded band in the chart below). For option traders this was a “fabulous” trade.

A week after the report the market is undecided on what to do with TSLA in the short term. All indicators are “neutral”: the stock has gone sideways for a week; the MACD averages are flat and overlapping;  the MACD itself is at zero; both the 50-day moving average (the red line in the chart below) and the 200-day moving average (the yellow line in the chart below) are flat. All of these indicators are showing the absence of a trend. Trading in these conditions is not advisable and fairly risky. I’m personally out of trading TSLA until a trend appears.

Source: Wall Street I/O

Source: Wall Street I/O

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Elon Musk

FAA kicks off review of SpaceX’s bid to fly Starship nearly every day

FAA is reviewing SpaceX’s plan for 456 Starship launches a year, up from 25 today.

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Rendering of Elon Musk overlooking a Starship fleet (Credit: Grok)

The FAA said Tuesday that it will prepare an environmental impact statement on SpaceX’s proposal to run as many as 456 Starship launches and 912 landings a year from Starbase, Texas. SpaceX is currently authorized for 25 launches and 50 landings annually, which makes the request roughly 18 times the existing ceiling. The notice of intent is set to publish in the Federal Register on Wednesday.

The plan comes in two phases. Phase 1 would allow up to 100 launches and 200 landings a year, on any day and at any hour. Phase 2, which the FAA says could arrive within several years, would raise the limit to the full 456 launches, still at any hour but only on weekdays. The agency noted that 912 landings is the upper limit for the Texas facility no matter where a given mission begins, and that Starship and Super Heavy could come down at the launch site or in the Gulf and open ocean.

A draft statement will be released for public comment at a later date, and the FAA has not said when. According to the Federal Registar, written comments are due November 30 on regulations.gov under docket FAA-2026-12808, with in person scoping meetings on November 17 in Brownsville and November 19 in Port Isabel, plus a virtual session on November 18. The review will weigh air quality, wildlife, coastal resources, water, noise, and aviation, and the FAA said any increase beyond this proposal would need its own separate review.

The numbers look large next to what Starbase has actually done. Starship has flown three times from Texas this year, including Flight 14 on September 28, the first orbital flight, which deployed 26 Starlink V3 satellites. Bloomberg reported that Starbase has never launched more than five times in a calendar year. The current cap of 25 comes from an FAA approval in May 2025. In February, the agency also approved up to 44 Starship launches a year from Launch Complex 39A in Florida, so Phase 1 in Texas alone would more than double that allowance.

Musk has said Starship could eventually fly more than once per hour within less than a decade, per Bloomberg. The nearer term target is Flight 15. Musk said on October 10 that it is hopefully four to six weeks away and will try to catch the ship with the tower, as Teslarati covered. That flight still runs under the existing 25 launch limit, and so would every Starbase launch for as long as the new review takes.

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As of mid morning Pacific time on Tuesday, SpaceX had not posted about the filing on its own account.

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Investor's Corner

Elon Musk drops a Thanksgiving hint about Starship’s biggest test yet

Elon Musk says Starship Flight 15 will try to catch the ship itself, a first.

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Elon Musk says SpaceX’s next Starship flight will try something nobody has done before, by catching the ship itself. Speaking to roughly 2,000 people at the X Takeover event at Giga Texas on Saturday, Musk said Flight 15 is about four to six weeks away and “probably launches a little bit before Thanksgiving, is my guess.”

That is a slip from earlier reporting, which had pointed to a launch as early as October 19. Musk explained why the date keeps moving. “We’re making a bunch of improvements to the rocket between every flight,” he said, adding that there are often hundreds, sometimes thousands, of small changes. This time the list is short, “but some of them take a fair bit of work and we’ve got to go inside the tank to make some of these changes.”

“We’re going to try to catch the ship, which is a super big deal,” Musk said. “If we do so, that’ll be the first time that there’s been full recovery of an orbital class rocket.” SpaceX has already caught the Super Heavy booster with the tower’s mechanical arms, and has talked about catching the ship since late 2025, but the upper stage has never been caught.

Musk also laid out what comes after. “The next big milestone would be to refly both the booster and the ship,” he said, describing a Flight 16 where “all parts of an orbital rocket are reflown.”

The reason SpaceX wants this comes down to cost and cadence. Every Starship ship so far has ended its flight in the ocean, and SpaceX expects most of those water landings to end in fireballs. A ship that returns to Starbase intact can be inspected and flown again. SpaceX’s IPO filing, says Starship V3 is designed to deliver 100 metric tons to orbit in a fully reusable configuration, that SpaceX aims to cut the cost to reach orbit by 99% or more versus the historical average, and that tower catches should allow “multiple launches per day.”

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The payoff goes beyond cheaper launches. The next generation Starlink V3 satellites are too large for Falcon 9 and can only fly on Starship, which can carry up to 60 per flight. Flight 14 on September 28 deployed the first 26 of them after Starship reached orbit despite an early engine shutdown, as Teslarati reported. Musk blamed engine computer software, and said the heat shield “was extremely robust,” which he claimed in August had solved Starship’s biggest challenge.

NASA’s Moon plans depend on the same capability. NASA’s inspector general has described a lander mission that needs a propellant depot in low Earth orbit and more than 10 tanker flights, with SpaceX targeting one tanker launch every six days. That schedule only works if ships and boosters come back fast and fly again. Also, ship to ship propellant transfer has not been attempted yet.

One interesting hurdle yet to be explored is bringing the ship back to the launch site, with reentry over land, which will undoubtedly come with a lot of aviation safety reviews.

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Investor's Corner

SpaceX reveals how its 1 Million AI satellite network will work and prevent space collisions

SpaceX reveals plans for one million Starmind AI satellites and calls out operators hiding maneuvers.

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Concept rendering of SpaceX Starmind constellation via Grok
Concept rendering of SpaceX Starmind constellation via Grok

SpaceX has put the largest satellite count it has ever published into writing, and it says that plan only works if every other operator in orbit starts sharing what it knows.

In a new Space Safety page highlighted Tuesday morning by Sawyer Merritt on X, SpaceX said it “plans to operate up to 100,000 Starlink satellites and up to 1 million Starmind AI satellites to meet the growing demand for broadband and supercompute.” Starlink has a little over 11,000 satellites in orbit today, so the target alone implies roughly a ninefold expansion of the broadband network.

Starmind is SpaceX’s orbital AI compute constellation. Elon Musk confirmed the Starmind name in June after an xAI trademark filing surfaced, and in August SpaceX said it was working with Nvidia on the compute payload. The FCC accepted the filing for up to one million satellites back in February.

FCC accepts SpaceX filing for 1 million orbital data center plan

SpaceX also released a new render of what a full Starmind constellation could look like. Alongside it, SpaceX VP Michael Nicolls explained why the satellites will not operate on their own. “We need to operate clusters of satellites in tight formation to get enough coherent compute to run AI models efficiently,” Nicolls said. “A cluster will be 10-ish satellites connected with 10 terabits or so of bandwidth between them, and interconnected to the broader constellation.”

That is the most specific detail SpaceX has given on how Starmind will be built. Instead of a million independent servers, the network would work as tightly packed groups of about 10 satellites acting as one compute unit, with Starlink’s laser links carrying results back to Earth.

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Packing satellites that close together, at that scale, makes collision avoidance the central problem, and most of the Space Safety page is aimed at other operators. SpaceX said Starlink encountered collision risks with about 650 unique maneuvering third party satellites in 2026, and only about half of them shared data. Over six months, Starlink recorded roughly 164,000 more collision risks where the closest approach came within four hours of an unannounced maneuver.

Some operators keep maneuver plans private over proprietary concerns, while others cannot get government permission to share them. SpaceX called those policies “counterproductive,” saying they “largely only serve to create preventable collision risk between satellites.” Starlink is also offering a free ephemeris sharing and screening platform that returns risk results within a minute, backed by its Stargaze network of 30,000 optical sensors.

The push comes as the Starmind application draws opposition from astronomers and environmental groups. In a September filing with the FCC, SpaceX said each Starmind satellite could weigh up to 4,000 kg, nearly seven times the mass of a Starlink V2 Mini. Musk has brushed off crowding concerns before, telling viewers in June that “space is enormous” and that SpaceX already knows how to run very large constellations safely.

SpaceX’s Starmind page says its Gigasat factory in Bastrop, Texas, is designed to produce AI satellites at scale, with deployment of thousands of units starting as soon as late 2027.

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