Elon Musk’s electric car manufacturing company Tesla is looking at another quarter of losses, even as it is looking at good sales numbers and ahead-of-schedule construction of the Gigafactory 3.
Why is Tesla looking at losses again?
Tesla Motors Inc. is expected to report its second-quarter 2019 results after market close on Wednesday. The company’s stock is experiencing a rally after the company posted better-than-expected quarterly sales figure earlier. However, despite all the good sales numbers, investors will be looking at the company’s profitability. They would also want to look into the company’s ability to fulfill its promise of selling 360,000 to 400,000 vehicles this year.
Garrett Nelson, an analyst at CFRA Research, said that the company’s stock’s ability to move up would depend on its sales guidance while noting that they are skeptical of the company hitting that goal. However, Argus Research’s Bill Selesky thinks that Tesla’s loss will be 18 cents in the second quarter, which is far below Wall Street’ consensus. He pointed towards stronger demand for the company’s products and said that it is yet to be seen if they will be able to keep costs and expenses under control while improving their margins.
Tesla is working hard for cost control
It would not be wrong to say that Elon Musk’s flamboyant company has recently turned into a penny pincher while increasing the cost of some of its variants. Its CEO Elon Musk and CFO Zach Kirkhorn are ensuring that they track and save every penny they could. In fact, Kirkhorn promised earlier this year that the company would be profitable by the third quarter. The second-quarter results will decide if the company is finally becoming profitable or missing another deadline.
A poll of analysts by FactSet reveals that Tesla is expected to report an adjusted quarterly loss of 41 cents per share. That would be a tremendous decrease from a loss of $3.06 per share from the same quarter last year. Wall Street also expects that the company will have non-GAAP profitability by the fourth quarter. Sales are expected to $6.5 billion for this quarter, a hefty increase on $4 billion from Q2 2018.
On the other hand, Estimize is suggesting that the company will post a loss of 28 cents per share. Its sales estimates are $6.6 billion.
Currently, the stock is enjoying a relatively good period and has gained 14% in July after a 21% gain in June. However, due to big losses in the first quarter, the shares are still down 23% for 2019.