Connect with us

Investor's Corner

Tesla (TSLA) Q2 2018 financial report and earnings call: What to expect

Published

on

Tesla (NASDAQ:TSLA) is set to release its financial report for the second quarter after markets close on Wednesday, August 1, 2018, followed by its Q2 2018 earnings call at 2:30 p.m. PST (5:30 p.m. EST).

With a vast majority of the second-quarter spent pushing volume production of Model 3, questions are abounding if vehicle demand matches company claims and if Tesla is finally on its way to profitability. Arguably, the elephant in the room will be indicators on whether the company will have to raise more capital due to what Wall Street analysts widely regard as Tesla’s cash flow challenges. Here is an outline of things to expect in Tesla’s Q2 2018 financial results and earnings call.

Tesla’s Losses and Revenue

Considering that the electric car maker continued to invest heavily in the Model 3 ramp over Q2, a consensus among Wall Street analysts suggest that Tesla would be reporting a loss of $2.81 per share. Among 21 analysts, the range for expectations made public about the company’s losses for the second quarter spans from a loss of $3.44 to $1.71 per share.

Wall Street analysts estimate that Tesla would post revenue of around $3.97 billion, which is significantly higher than the $2.79 billion the company posted for the second quarter of 2017. If analysts’ predictions are correct, Tesla would be able to post a year-on-year growth of $42.3%. Ultimately, Tesla’s revenue would be a compelling point in the company’s financial report, validating CEO Elon Musk’s narrative that the electric car and energy company continues to see strong demand in the past seven quarters. Tesla’s revenue has increased sequentially in each of the last six quarters as well.

Model 3 Ramp and Delivery Guidance

Tesla is expected to give an update on the current state of Model 3 production. With the electric car maker managing to hit its self-imposed target of manufacturing 5,000 Model 3 per week in a “burst build effort” during the final week of June, questions are now abounding about the company’s capability to exceed this production rate.

Advertisement

Tesla’s plans and strategies for the delivery of the Model 3 are also expected to be discussed in the Q2 earnings call. With the company recently selling its 200,000th vehicle in the United States, Tesla would likely provide delivery guidance for the Model 3 as the $7,500 federal tax credit starts its phase-out period.

Tesla Energy

Tesla Energy has slowly been growing in the background as the company’s electric car business stayed in the limelight. Over the past months, Tesla has teased several key developments in its Energy business. During the 2018 Annual Shareholder Meeting, Elon Musk mentioned that the company is on pace to “cross a key battery-cost threshold of $100-per-kilowatt-hour later this year.” Such a milestone could cut the cost of its upcoming products such as the Model Y, while pushing Tesla forward as a leader in battery technology.

Updates on large-scale Tesla Energy initiatives, including a 1 GWh scale energy project that Musk teased in the Shareholder Meeting, as well as the South Australia virtual power plant, would likely be discussed as well.

Financial Guidance

Tesla CEO Elon Musk has made his stance clear during the now-infamous Q1 2018 earnings call that he does not intend to raise capital this year. Musk has also reiterated his prediction that Tesla would be profitable in the third or fourth quarter of 2018. This goal, however, hinges on the successful ramp of the Model 3.

During Tesla’s update on vehicle deliveries for Q1, the company stated that the 5,000 Model 3 per week milestone is expected to lay “the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin, and strong positive operating cash flow.” Tesla’s Q2 2018 earnings call would likely cover how the company plans to hit the green for the second half of the year.

Advertisement

A webcast of Tesla’s Q2 2018 earnings call could be accessed here on Wednesday at 2:30 p.m. PST (5:30 p.m. EST).

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

Advertisement
Comments

Elon Musk

Tesla blacklisted by Swedish pension fund AP7 as it sells entire stake

A Swedish pension fund is offloading its Tesla holdings for good.

Published

on

tesla
(Credit: Tesla)

Tesla shares have been blacklisted by the Swedish pension fund AP7, who said earlier today that it has “verified violations of labor rights in the United States” by the automaker.

The fund ended up selling its entire stake, which was worth around $1.36 billion when it liquidated its holdings in late May. Reuters first reported on AP7’s move.

Other pension and retirement funds have relinquished some of their Tesla holdings due to CEO Elon Musk’s involvement in politics, among other reasons, and although the company’s stock has been a great contributor to growth for many funds over the past decade, these managers are not willing to see past the CEO’s right to free speech.

However, AP7 says the move is related not to Musk’s involvement in government nor his political stances. Instead, the fund said it verified several labor rights violations in the U.S.:

“AP7 has decided to blacklist Tesla due to verified violations of labor rights in the United States. Despite several years of dialogue with Tesla, including shareholder proposals in collaboration with other investors, the company has not taken sufficient measures to address the issues.”

Advertisement

Tesla made up about 1 percent of the AP7 Equity Fund, according to a spokesperson. This equated to roughly 13 billion crowns, but the fund’s total assets were about 1,181 billion crowns at the end of May when the Tesla stake was sold off.

Tesla has had its share of labor lawsuits over the past few years, just as any large company deals with at some point or another. There have been claims of restrictions against labor union supporters, including one that Tesla was favored by judges, as they did not want pro-union clothing in the factory. Tesla argued that loose-fitting clothing presented a safety hazard, and the courts agreed.

tesla employee

(Photo: Tesla)

There have also been claims of racism at the Fremont Factory by a former elevator contractor named Owen Diaz. He was awarded a substantial sum of $137m. However, U.S. District Judge William Orrick ruled the $137 million award was excessive, reducing it to $15 million. Diaz rejected this sum.

Another jury awarded Diaz $3.2 million. Diaz’s legal team said this payout was inadequate. He and Tesla ultimately settled for an undisclosed amount.

AP7 did not list any of the current labor violations that it cited as its reason for

Advertisement
Continue Reading

Investor's Corner

xAI targets $5 billion debt offering to fuel company goals

Elon Musk’s xAI is targeting a $5B debt raise, led by Morgan Stanley, to scale its artificial intelligence efforts.

Published

on

(Credit: xAI)

xAI’s $5 billion debt offering, marketed by Morgan Stanley, underscores Elon Musk’s ambitious plans to expand the artificial intelligence venture. The xAI package comprises bonds and two loans, highlighting the company’s strategic push to fuel its artificial intelligence development.

Last week, Morgan Stanley began pitching a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, one source said. A second option offers a fixed-rate loan and bonds at 12%, with terms contingent on investor appetite. This “best efforts” transaction, where the debt size hinges on demand, reflects cautious lending in an uncertain economic climate.

According to Reuters sources, Morgan Stanley will not guarantee the issue volume or commit its own capital in the xAI deal, marking a shift from past commitments. The change in approach stems from lessons learned during Musk’s 2022 X acquisition when Morgan Stanley and six other banks held $13 billion in debt for over two years.

Morgan Stanley and the six other banks backing Musk’s X acquisition could only dispose of that debt earlier this year. They capitalized on X’s improved operating performance over the previous two quarters as traffic on the platform increased engagement around the U.S. presidential elections. This time, Morgan Stanley’s prudent strategy mitigates similar risks.

Advertisement

Beyond debt, xAI is in talks to raise $20 billion in equity, potentially valuing the company between $120 billion and $200 billion, sources said. In April, Musk hinted at a significant valuation adjustment for xAI, stating he was looking to put a “proper value” on xAI during an investor call.

As xAI pursues this $5 billion debt offering, its financial strategy positions it to lead the AI revolution, blending innovation with market opportunity.

Continue Reading

Elon Musk

Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

Tesla’s future lies beyond cars—with robotaxis, humanoid bots & AI-driven factories. Cathie Wood predicts a 9x surge in 5 years.

Published

on

Cathie Wood shared that Tesla is her top stock pick. During Steven Bartlett’s podcast “The Diary Of A CEO,” the Ark Invest founder highlighted Tesla’s innovative edge, citing its convergence of robotics, energy storage, and AI.

“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI,” Wood said of Tesla. She emphasized the company’s potential beyond its current offerings, particularly with its Optimus robots.

“And it’s not stopping with robotaxis; there’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” she added.

In June 2024, Ark Invest issued a $2,600 price target for Tesla, which Wood reaffirmed in a March Bloomberg interview, projecting the stock to reach this level within five years. She told Bartlett that Tesla’s Optimus robots would drive productivity gains and create new revenue streams.

Advertisement

Elon Musk echoed Wood’s optimism in a CNBC interview last month.

“We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible,” Musk said.

Tesla’s stock has faced volatility lately, hitting a peak closing price of $479 in December after President Donald Trump’s election win. However, Musk’s involvement with the White House DOGE office triggered protests and boycotts, contributing to a stock decline of over 40% from mid-December highs by March.

The volatility in Tesla stock alarmed investors, who urged Musk to refocus on the company. In a May earnings call, Musk responded, stating he would be “scaling down his involvement with DOGE to focus on Tesla.” Through it all, Cathie Wood and Ark Invest maintained their faith in Tesla. Wood, in particular, predicted that the “brand damage” Tesla experienced earlier this year would not be long term.

Despite recent fluctuations, Wood’s confidence in Tesla underscores its potential to redefine industries through AI and robotics. As Musk shifts his focus back to Tesla, the company’s advancements in Optimus and other innovations could drive it toward Wood’s ambitious $2,600 target, positioning Tesla as a leader in the evolving tech landscape.

Advertisement
Continue Reading

Trending