Investor's Corner
Tesla (TSLA) Q2 2020 earnings call: Top 4 things to watch out for
Tesla (NASDAQ: TSLA) will report its Q2 2020 performance in an Earnings Call on Wednesday, July 22, 2020. Ahead of the call, investors and supporters of the electric automaker will be waiting to see if the company will turn its fourth straight profit, which would be a company record.
However, four things could ultimately affect Tesla’s performance during the second quarter of the year, which could lead to the company’s inclusion in the S&P 500 index. TheStreet believes that investors should pay attention to these four themes in the Q2 2020 Earnings Update Letter and Call.
1. Impact of Price Cuts
Tesla has reduced the prices of all four of its available vehicles so far in 2020. The move stimulated demand for the company’s electric cars, but analysts are conflicted about whether the strategy was a good business move or an indication that demand is lagging. However, it more than likely is not the latter, as Tesla managed to deliver 90,650 vehicles in the second quarter, beating Wall Street estimates handily. The company’s revenue for Q2 compared to its overall delivery figure for the quarter will give more insight into what the price cuts did to Tesla’s demand.
2. Free Cash Flow
TSLA shares have continued to rise in value nearly every day for the past few months. The run is particularly incredible because it has mainly occurred during the COVID-19 pandemic, which continues to tear through the United States, where the electric automaker is based. With the company’s surge in price per share, Tesla has overtaken Toyota as the most valuable automaker in the world. The company’s bulls believe Tesla can scale production around the globe, and the company is certainly looking to do that. With plans to open another production facility in the U.S. soon, Giga Berlin under construction, and rumors of another Asian and U.K. located factory in the works, there is no reason to believe that the company can’t assume worldwide success.
3. China Demand
China has become one of the main parts of Tesla’s success as an automaker in 2020. The company currently only produces the Model 3 at Giga Shanghai now, but the vehicle has been selling well according to figures from the China Passenger Car Association (CPCA). Tesla will look to expand its production to the Model Y soon as it is building the Shanghai factory’s “Phase 2” currently. Dan Ives, an analyst for Wedbush Securities, said, “strong Model 3 demand out of China remains a ray of shining light (and we believe was a clear standout in 2Q) for Tesla in a dark global macro.” He also believes that Tesla could deliver 150,000 vehicles this year in China alone.
Giga Shanghai is currently holding a 200,000 annual vehicle production rate, Tesla said in the Q1 Earnings Call. It will be interesting to see if that number has increased.
4. Full-Year Outlook
Tesla has managed to power through the COVID-19 pandemic with relatively small amounts of damage. However, the company’s outlook for all of 2020 has not been updated. Both the Fremont and Shanghai production facilities were closed for one and a half months, and two weeks, respectively. The company expected to deliver 500,000 cars this year, but in the first half of the year, only 179,000 were successfully given to consumers. Tesla said it would modify its full-year guidance in Q2 during the Q1 Earnings Call, so the revisions to the company’s goals will likely be included with the Update Letter.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
Investor's Corner
Tesla wins $508 price target from Stifel as Robotaxi rollout gains speed
The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Tesla received another round of bullish analyst updates this week, led by Stifel, raising its price target to $508 from $483 while reaffirming a “Buy” rating. The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Robotaxi rollout, FSD updates, and new affordable cars
Stifel expects Tesla’s robotaxi fleet to expand into 8–10 major metropolitan areas by the end of 2025, including Austin, where early deployments without safety drivers are targeted before year-end. Additional markets under evaluation include Nevada, Florida, and Arizona, as noted in an Investing.com report. The firm also highlighted strong early performance for FSD Version 14, with upcoming releases adding new “reasoning capabilities” designed to improve complex decision-making using full 360-degree vision.
Tesla has also taken steps to offset the loss of U.S. EV tax credits by launching the Model Y Standard and Model 3 Standard at $39,990 and $36,990, Stifel noted. Both vehicles deliver more than 300 miles of range and are positioned to sustain demand despite shifting incentives. Stifel raised its EBITDA forecasts to $14.9 billion for 2025 and $19.5 billion for 2026, assigning partial valuation weightings to Tesla’s FSD, robotaxi, and Optimus initiatives.
TD Cowen also places an optimistic price target
TD Cowen reiterated its Buy rating with a $509 price target after a research tour of Giga Texas, citing production scale and operational execution as key strengths. The firm posted its optimistic price target following a recent Mobility Bus tour in Austin. The tour included a visit to Giga Texas, which offered fresh insights into the company’s operations and prospects.
Additional analyst movements include Truist Securities maintaining its Hold rating following shareholder approval of Elon Musk’s compensation plan, viewing the vote as reducing leadership uncertainty.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
Investor's Corner
Tesla receives major institutional boost with Nomura’s rising stake
The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Tesla (NASDAQ:TSLA) has gained fresh institutional support, with Nomura Asset Management expanding its position in the automaker.
Nomura boosted its Tesla holdings by 4.2%, adding 47,674 shares and bringing its total position to more than 1.17 million shares valued at roughly $373.6 million. The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Institutional investors and TSLA
Nomura’s filing was released alongside several other fund updates. Brighton Jones LLC boosted its holdings by 11.8%, as noted in a MarketBeat report, and Revolve Wealth Partners lifted its TSLA position by 21.2%. Bison Wealth increased its Tesla stake by 52.2%, AMG National Trust Bank increased its position in shares of Tesla by 11.8%, and FAS Wealth Partners increased its TSLA holdings by 22.1%. About 66% of all outstanding Tesla shares are now owned by institutional investors.
The buying comes shortly after Tesla reported better-than-expected quarterly earnings, posting $0.50 per share compared with the $0.48 consensus. Revenue reached $28.10 billion, topping Wall Street’s $24.98 billion estimate. Despite the earnings beat, Tesla continues to trade at a steep premium relative to peers, with a market cap hovering around $1.34 trillion and a price-to-earnings ratio near 270.
Recent insider sales
Some Tesla insiders have sold stock as of late. CFO Vaibhav Taneja sold 2,606 shares in early September for just over $918,000, reducing his personal stake by about 21%. Director James R. Murdoch executed a far larger sale, offloading 120,000 shares for roughly $42 million and trimming his holdings by nearly 15%. Over the past three months, Tesla insiders have collectively sold 202,606 shares valued at approximately $75.6 million, as per SEC disclosures.
Tesla is currently entering its next phase of growth, and if it is successful, it could very well become the world’s most valuable company as a result. The company has several high-profile projects expected to be rolled out in the coming years, including Optimus, the humanoid robot, and the Cybercab, an autonomous two-seater with the potential to change the face of roads across the globe.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
Tesla on track to break Volkswagen’s historic record in Norway: report
Tesla Full Self-Driving lands in a new country, its 7th
