Investor's Corner

TSLA Extended Hours Action after Q1 Report & Conference Call

TSLA action on the day of the Q1 Report was effectively a wash: TSLA stock opened at 230.29 and closed the regular trading session down -4.20% at $222.56, but gained almost all of it back during “extended hours”, closing the day at 228.50. Right after the quarterly results were released, it traded as high as $243.43.

Source: OptionHouse Trading Platform

Source: OptionsHouse Trading Application

Obviously traders and brokers liked both the results and the subsequent answers that were given in the conference call.

What items did the traders actually like?

– Beating analysts’ expectations for earnings by 3 cents.

– Revenue of $1.15B, with sales of $1.6B. Net loss of $ -57c a share. A beat on the loss, a meet on sales.

– A decrease in capital expenditures by 47% from Q4 2015, with spending decreases at both Fremont factory and Gigafactory.

– A much more ambitious timeline of delivery of vehicles: 500,0000 vehicles in 2018 (two years ahead of the previous projections), and 1 Million vehicles in 2020.

– Adjusted plans for the Gigafactory to support the new timeline targets in 2018.

– A mix of 100-150K Model S and X, plus 300-400K Model 3, for 2018 vehicle deliveries.

– A July 1st, 2017 deadline for suppliers of Model 3 parts.

– A combination of capital & debt to support the more ambitious timeline.

– Projections of 20,000 vehicles delivered in Q2, and 50,000 in the rest of the year, maintaining the 80,000 to 90,000 vehicles projection for the year 2016.

– Brushing off the loss of 2 top executives for production and manufacturing, because Tesla is the place top talent in manufacturing would want to be, since at Tesla “innovation in manufacturing is more important than innovation in design” (a subtle swipe at Apple).

Interestingly no new reservation numbers for Model 3 were given, as we stand at “almost 400,000” from a couple of weeks ago.

Will Tesla be able to deliver on the adjusted projections? History tells us probably no. But short-term, Elon & Co. delivered: the pessimism that was evident among brokers and traders before the report and conference call, pretty much evaporated. My expectation for Thursday’s market is an opening between 228 and 230.

After 6 sessions that brought the stock from $255 down 9% to $222, we may see momentum start going the other way up again.

Update

While TSLA, as expected, opened at 228.46, it quickly turned red and within an hour was done 4.5%. From the morning broker’s comments, not everybody is buying Elon’s rosy projections. You have now witnessed how “volatile” TSLA stock can be: it went from an after-hours peak of $243 to $212 in a span of a few trading hours, a 13% drop. Not a stock for the faint of heart.

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