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Investor's Corner

What to look for in Tesla Motors Q1 Financials

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Tesla (NASDAQ: TSLA) is set to announce its first quarter earnings report after market close on Wednesday, May 4, 2016.

TSLA reported 4th quarter 2015 earnings of $ -0.87 per share on February 10, 2016. This missed the consensus of $ 0.10 by $ -0.97 of the 16 analysts covering this company. Interestingly that turned out to be the end of a dramatic 42% slide which began on January 1st. Since then TSLA has moved from its lowest point of $141 on that day to roughly $250 per share, a 78% increase in just 3 months. That kind of tells you that TSLA is a stock not for the faint of heart.

Source: WallSt I/O

Source: WallSt I/O

The consensus of the 14 analysts covering TSLA for 1st quarter 2016 is a per share loss of $ -.57, with range estimates of: 0.080 | -0.569 | -1.000 (High | Mean | Low).

Looking ahead at Tesla Q1 earnings summary (source: E-Trade)

$TSLA earnings summary via E-Trade

Based on 20 analysts offering 12-month targets from TSLA, the average price target is $243.95, effectively a zero-move from the current stock price. If you are an “investor” in TSLA stock, the pros tell you that TSLA will not go anywhere in the next 12 months.

$TSLA analysis via TipRanks

$TSLA analysis via TipRanks

So those are the numbers from the pros, but if you still decide that you want to trade TSLA stock, what should you be looking for in the quarterly results and the conference call webcast?

Q1 Vehicle Deliveries

Let’s take a look at a few items from the “Tesla 4th Quarter & Full year 2015 Shareholder Letter”.

In the “Q1 and Full Year 2016 Outlook” section, Tesla states that “we plan to deliver 80,000 to 90,000 new Model S and Model X vehicles in 2016. […] In Q1, we plan to grow deliveries 60% year on year to approximately 16,000 vehicles”.

Source: Tesla Motors

Source: Tesla Motors

We already know that Q1 deliveries did not meet the promised 16,000 units, as that number was actually 14,820, due to “severe Model X supplier parts shortages in January and February” as provided in a Press Release on April 4, 2016. In the same release, “Tesla reaffirms its full-year delivery guidance [of 80,000 to 90,000 vehicles].”

The missing income due to the delayed Model X vehicles delivery will be partially offset by the initial Model 3 “reservations”. It is quite interesting that reservations opened on March 31, 2016, the last day in the quarter, and at least 125,000 of them may be counted as an additional $125M income in Q1. In the end, guidance on vehicle deliveries for Q2 2016 will be one of the deciding factors on where TSLA stock moves post the Q1 report.

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Cash Flow and Margins

In the same Q4 Shareholder Letter, Tesla states that “we expect to generate positive net cash flow and achieve non-GAAP profitability for the full-year 2016”, and “we plan to fund about $1.5 billion in capital expenditures without accessing any outside capital.” These are both very aggressive goals, especially in light of the 400,000+ Model 3 reservations, as of the latest disclosed counts. Elon Musk has already tweeted that he is “definitely going to need to rethink production plans”, which likely means that another factory will be needed to produce the Model 3 in a reasonable timeline that will allow delivery to the majority of the current reservation holders. This more aggressive delivery of Model 3 vehicles as originally envisioned will likely require outside capital for building such factory.

Since missing the mark on Model X will impact cash flow for Q1, I would expect questions in the conference call asking if the issues have been resolved, and if the missing Model X numbers can be made up in Q2. While cash flow reversed action to the positive for the first time during Q4 2015, with a strong $179M cash flow from core operations, Tesla needs to prove that this behavior will continue in 2016.

Again in the Q1 Shareholder Letter, Tesla states that “Throughout the rest of 2016, Automotive gross margins should continue to increase. […] Model S gross margins should begin to approach 30% and Model X gross margins should be about 25%.” In Q4 gross margins were 20.9% for the Tesla Model S and even a slight increase in margins will be viewed positively by the market. This is a number that will be greatly watched as Tesla needs to prove that it can eventually deliver 500K+ vehicles / year at a profit. Much of the current valuation of Tesla stock is built on this assumption. Accordingly, a drop in margins for Q1 would be viewed very negatively by the market, at least for the short term.

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Summarizing, besides vehicle delivery, cash flow and margins will be the other two drivers of the TSLA stock short-term market action after the Q1 report numbers are released.

Live Q&A Webcast

Tesla management will hold a live question & answer webcast on May 4 at 2:30pm Pacific Time to discuss the Company’s financial and business results and outlook. Live and replay webcast will be available at http://ir.teslamotors.com/eventdetail.cfm?EventID=171952 .

Tip of the Week

Starting with today’s posting I’ll be including a “tip of the week.” This may involve covering a trading concept, or recommending a website with tools or information useful to investors and traders of TSLA.

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For this week, I am recommending signing up for the free Basic Membership of TipRanks.  With it you can receive free alerts for 1 stock and 1 expert, which is enough for the ones just interested in TSLA stock. Happy trading.

Disclosure: I currently have no positions in any stocks mentioned, but I may plan to initiate positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Teslarati). I have no business relationship with any company whose stock is mentioned in this article.

Investor's Corner

Tesla Board member and Airbnb co-founder loads up on TSLA ahead of robotaxi launch

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member’s purchase.

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(Credit: Tesla)

Tesla Board member and Airbnb Co-Founder Joe Gebbia has loaded up on TSLA stock (NASDAQ:TSLA). The Board member’s purchase comes just over a month before Tesla is expected to launch an initial robotaxi service in Austin, Texas.

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member in a post on social media.

The TSLA Purchase

As could be seen in a Form 4 submitted to the United States Securities and Exchange Commission (SEC) on Monday, Gebbia purchased about $1.02 million worth of TSLA stock. This was comprised of 4,000 TSLA shares at an average price of $256.308 per share.

Interestingly enough, Gebbia’s purchase represents the first time an insider has purchased TSLA stock in about five years. CEO Elon Musk, in response to a post on social media platform X about the Tesla Board member’s TSLA purchase, gave a nod of appreciation for Gebbia. “Joe rocks,” Musk wrote in his post on X.

Gebbia has served on Tesla’s Board as an independent director since 2022, and he is also a known friend of Elon Musk. He even joined the Trump Administration’s Department of Government Efficiency (DOGE) to help the government optimize its processes.

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Just a Few Weeks Before Robotaxi

The timing of Gebbia’s TSLA stock purchase is quite interesting as the company is expected to launch a dedicated roboatxi service this June in Austin. A recent report from Insider, citing sources reportedly familiar with the matter, claimed that Tesla currently has 300 test operators driving robotaxis around Austin city streets. The publication’s sources also noted that Tesla has an internal deadline of June 1 for the robotaxi service’s rollout, but even a launch near the end of the month would be impressive.

During the Q1 2025 earnings call, Elon Musk explained that the robotaxi service that would be launched in June will feature autonomous rides in Model Y units. He also noted that the robotaxi service would see an expansion to other cities by the end of 2025. “The Teslas that will be fully autonomous in June in Austin are probably Model Ys. So, that is currently on track to be able to do paid rides fully autonomously in Austin in June and then to be in many other cities in the US by the end of this year,” Musk stated. 

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Investor's Corner

Tesla hints at ‘Model 2’ & next-gen EV designs

Tesla’s Q1 2025 update confirms new models this year, with production tied to existing factory lines. Could it be time for the Model 2 debut?

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(Credit: Tesla)

During its Q1 2025 earnings call, Tesla executives hinted at the much-rumored “Model 2” and other next-gen EV designs.

Tesla slightly addressed whether or not it will be pushing forward with the debut of new models later this year in its latest earnings call. The company’s product development executive, Lars Moravy, shared some details about Tesla’s design process and the upcoming affordable models.

“We’re still planning to release models this year. As with all launches, we’re working through, like, the last minute issues that pop up. We’re knocking them down one by one. At this point, I would say that the ramp might be a little slower than we had hoped initially…But there’s nothing that’s blocking us from starting production within the next, within the timeline laid out in the opening remarks.

“And I will say it’s important to emphasize that, as we’ve said all along, the full utilization of our factories is the primary goal for these new products. And so the flexibility of what we can do within the form factor and, you know, the design of it is really limited to what we can do on our existing lines rather than building new ones. But we’ve been targeting the low cost of ownership. Monthly payment is the biggest differentiator for our vehicles, and that’s why we’re focused on bringing these new models with the, you know, the lowest price, to the market, within the constraints I just highlighted.”

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In January, Tesla’s Chief Financial Officer Vaibhav Taneja teased several new product introductions for this year. There is at least one product that most Tesla supporters and investors are hoping to see: the company’s affordable vehicles, which have been dubbed by the EV community as the “Model 2” or “Model Q.”

Before Tesla’s Robotaxi event last year, many speculated that the company would also unveil its affordable next-gen vehicle. Gene Munster from Deepwater had expected Tesla to release a stripped-down version of the Model 3 as its affordable vehicle during the Robotaxi event. In the end, Tesla unveiled its Robotaxi vehicle and its Robovan design.

It’s been a while since the Robotaxi event, and Tesla has kept mum about its affordable vehicle. Considering its Q1 2025 performance, TSLA investors look forward to catalysts that could boost the stock.

The “Model 2” has been labeled a potential catalyst for Tesla. As such, TSLA investors and supporters have been itching for news about the new affordable vehicle. The main questions surrounding the “Model 2” revolve around its design and price. Based on Moravy’s statement, the “Model 2’s” design will heavily depend on Tesla’s current assembly lines and supply chain structures.

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Elon Musk

Tesla regains Piper Sandler’s confidence with Robotaxi plans & Q1 Results

Piper Sandler says Tesla delivered the best-case scenario for bulls. $TSLA has catalysts ahead to silence the bears.

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tesla-model-y-delivery
(Credit: Tesla)

Tesla gained Piper Sandler analyst Alexander Potter’s confidence following its Q1 2025 earnings call. Piper Sandler reaffirmed its Overweight rating and $400 TSLA price target, signaling optimism for the company’s robotaxi and affordable vehicle launches expected this year. The firm’s stance reflects Tesla’s resilience amid market challenges.

Despite expectations of weak Q1 financials, Tesla’s stock edged up in after-hours trading, defying skepticism. Piper Sandler’s Alexander Potter noted that the results met the hopes of Tesla supporters, particularly as the company held firm on its timelines. Potter emphasized that anticipation for robotaxi details and new vehicle launches should keep critics at bay, supporting the $400 target.

“In our preview last week, we predicted that (at best) Q1 would be a non-event. With the stock trading up slightly in the after-hours session, it appears our best-case scenario has materialized. Considering generally weak Q1 financials, we think this is the best result that TSLA bulls could’ve reasonably hoped for.

“In our view, the most important Q1 takeaway is this: Tesla didn’t hedge expectations re: launching Robotaxis or lower-priced vehicles in 1H25. With <2 months until the end of June, investors can look forward to some interesting catalysts in the weeks ahead. In our view, this alone should be enough to keep the bears at bay, at least until we have a better idea re: the details of Tesla’s new products, as well as the scale/scope of the Robotaxi launch,” wrote Potter.

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Wedbush Securities’ Dan Ives, a longtime TSLA bull, echoed Potter’s optimism for Tesla. Ives raised his price target for Tesla stock from $315 to $350 with a BUY rating. His Tesla upgrade came after Elon Musk’s announcement during the Q1 earnings call that he would reduce his involvement with DOGE, signaling a sharper focus on Tesla.

Tesla’s steady Q1 performance and unwavering commitment to its 2025 roadmap, including the Robotaxi launch and lower-priced models, bolster investor confidence. Piper Sandler’s analysis underscores Tesla’s ability to navigate a competitive electric vehicle market while advancing its technological edge. The upcoming Robotaxi launch and affordable vehicle introductions are pivotal, with analysts expecting these initiatives to drive stock value through 2025.

As Tesla prepares for these milestones, its stock movement reflects market trust in Musk’s vision. With Piper Sandler and Wedbush reaffirming bullish outlooks, Tesla’s strategic moves will remain under close scrutiny, positioning the company to capitalize on its innovation pipeline in a dynamic industry landscape.

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