Select the account you'd like to open


Tesla earnings look ahead

Tesla will report their second-quarter figures on Wednesday 2nd of August, after the closing bell in New York, 9pm (UK time).

Tesla is expected to report a loss of $1.88 per share for this quarter. Traders are anticipating sales to increase by 60% to $2.5 billion, compared with the same period last year, but keep in mind there was $2.7 billion in sales generated last quarter.

Guidance may also have a significant impact on sentiment, not only in terms of orders and production but also any hints from the company as to when (or if) they think they can actually turn a profit.

Tesla unveiled the much-awaited model 3 car on Friday. 30 cars have been sold to Tesla employees and mass production begins now. The CEO Elon Musk stated the company is in ‘production hell’. The share price slipped slightly since the grand unveiling of the model 3, as traders felt Musk sounded ‘squeamish’ at Friday’s event.   

The starting price is $35,000, which makes it less than half the cost of the model S or model X. Elon Musk doesn’t want to roll out expensive cars , and the model 3 has over half a million on the waiting list to receive one. That is an increase in excess of 25% since the business last updated the market on how many deposits had been put down for the model 3.

The firm hopes to manufacture 20,000 model 3’s in December, and then 400,000 next year, bringing total production across all vehicles to 500,000. This is the sort of production target investors can get behind. It seems to me the model 3 could be the goose that lays the golden egg for Tesla, due to its affordability.

Vehicle production jumped by 64% in the first-quarter on a year-on-year basis, and the company registered a record quarterly production, and it came in at just over 25,000. The car manufacturer is on track to hit its target of between 47,000 and 50,000 cars in the first half.

There are some small concerns that the popularity of the model 3 is eating into the potential sales of the more expensive model S, but at least it is internal competition it is facing. The model S come at a premium for a reason, as it has more customisation choices and more power.

The company has a very strong cash position as it had $4 billion in cash at the end of the first-quarter, up 17% from the end of fourth-quarter of last year. It will well positioned to spend money on atomisation and seeking efficiencies in production. The demand is clearly there for the model 3, the company now needs to ensure the manufacturing process is executed at an effective cost.

Countries like Norway, India, France and the UK are looking to phase out petrol and diesel cars. Granted for most of the countries the time line isn’t for many years, but it is an indication as to where the car industry is heading, and if Tesla get their business streamlined they would be in a great position to take advantage of the government legislation. 

Looking beyond the car production, Telsa is aiming to add approximately 100 delivery, retail and services stations around the world. That would equate to roughly a 30% increase on the year. The introduction of body shops and ramping up of the number of repair trucks will improve the after sales service. If Telsa are going to move up a gear in production and sales, the post-sales service must ramped up too. Getting customers to buy a Teslsa car is one thing, but making sure they are satisfied and keep coming back is another.   

Tesla’s energy generation and storage business is also seeing improvements, and gross margin in the first-three months was 29.1%, up from 20.3% in the same period last year. This side of Tesla’s business may not be as headline grabbing as electric cars but investors are glad to see the metrics are improving. Other streams of revenue are always bonus to have.

The stock has been in a strong upward trend since early 2016, and bulls are looking towards the record-high of $386.87, and support could come into play at $303.17 and $284.76.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Sign up for market update emails