Tesla is a great vehicle, but the stock is not among my top ten favorite stocks. It`s expensive to build vehicles in a very competitive industry which means they are burning a lot of money with a high cost.
Tesla will report results on Wednesday, May 4, 2016, after the bell.
Tesla plans to sell Model 3 to the mass-market in 2017, and the price is set to $35,000 and have already 400,000 preorders. That sounds good, but investors are concerned about their ability to deliver.
The company guided for about 80,000 – 90,000 deliveries of their Model X and Model S last year, but we all know that this was too optimistic. In 2016, they delivered a record 50,000 vehicles but failed to meet volume expectations the company set earlier in the year.
Tesla is still aiming to scale production up to 500,000 vehicles per year by 2020, and is now on the hook to deliver 400k of one model, with production starting next year. Model 3 will come with lower margins.
Model 3 comes on top of Model X and Model S, and a third model will keep Tesla`s profits in the red for the foreseeable future. Operating expenses currently accounts for almost 50% of their revenue.
Large amounts of money is already spent in launching their first SUV and building out a sustainable battery. As production ramps up for each of these models, energy credits from green technology are expected to shrink proportionally to sales growth.
Estimize call for EPS of $-0,51, which is 1 cent higher than Wall Street, while revenue estimates of $1,60B are just slightly above the sell-side
s $1,59B. The crowd has been bearish on Teslas profitability, moving EPS estimates down -326% since the Q4 report, now expecting earnings to decline 10% on a YoY basis.
Revenue estimates have also been ratcheted down by 8% but are expected to grow 47% from the year-ago period.
Investors are waiting for a forward-looking guidance on Wednesday. Not only Q1 results.
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