Tesla Motors Inc is set to release its second quarter (Q2 2015) earnings today after the closing bell. CEO Elon Musk will hold an earnings call shortly after and the fate of Tesla’s shares for the next couple of days/weeks will be sealed as the market interprets Elon Musk’s remarks in the call.
The market expects Tesla to post a loss. WSJ reports that the market expects Tesla to post adjusted net losses of $0.59 per share compared to a net profit of $0.11 from the comp period last year. The market expects Tesla to post a 36% increase in revenue to $1.17B.
Hence, the market is prepared for the worst case scenario and the general feeling in the market is that Tesla Motors Inc will meet estimates. Unless the firm reports a better than expected losses (or gains*) the stock is not likely to move on the strength of the financials.
Tesla Motors Will Move on Model X Delivery News
Tesla plans to deliver 55,000 vehicles by the end of this year that firm has not yet reached half of that delivery target. In the first quarter, Tesla Motors delivered a little over 10,000 cars in the first quarter and it plans to deliver about 11,000 cars in the second quarter. Tesla Motors has only managed to deliver 21,000 cars through June..
The 21,000 cars milestone comes from the deliveries of the Model S alone; adding the Model X to the cars to be delivered will definitely send Tesla on its way to meeting that 55,000-car target. The problem though is that Tesla has a history of failing to meet delivery deadlines.
The Model X should have hit the roads since 2014 but a series of delays had kept the car out of the roads until date. In addition, Tesla’s roll out of the Model S is still being limited by production constraints and the strain that those assembly lines will face now that two cars are being produced can only be imagined.
Elon Musk’s remarks during the earnings call have the potential to move the share price. Tesla Motors has managed to position itself as a tech firm and not a carmaker, but the market thinks Tesla should have outgrown its startup stage.
In essence, the market wants Tesla to start acting like a typical car maker by building enough cars to meet the demand. If Musk shows that the firm is acting like normal car makers, the market will ignore EPS losses and its share price will hold around the current range. If Musk says the firm is an atypical car maker, the market will focus on financials and then share price might fall.