Tesla Motors Inc Q2 Will Be A ‘Make Or Break’ Quarter

Tesla Motors Inc Q2 Will Be A ‘Make Or Break’ Quarter
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Tesla Motors scored big with deliveries in the March month of the last quarter, and now the same is required for the June month, which will decide if the second quarter could be the make or break quarter for the automaker. Bill Maurer of Seeking Alpha noted a report by Barclays Analyst Brain Johnson, which caused a “bit of a stir” recently.

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Tesla needs a big June

Johnson mentioned in the report that Tesla Motors Inc (NASDAQ:TSLA) will need a big month in terms of June to achieve the second quarter delivery target. The report noted that during April and May total Model S delivered in North America were 2,400 units and global delivery excluding China for the first two months came in at 3,500 units. This implies that if Tesla succeeds in selling around 1000 Model S in China, then North America and Europe would have achieve a combined target of 3000 deliveries in June to meet the company’s target of 7,500 units.

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Back in April, when everyone was in doubt over the number of deliveries that Tesla Motors could make, the electronic carmaker delivered 1,500 cars in Norway alone during March after just 563 in the first two months of the year.

Tesla is targeting to deliver 7,500 units in second quarter, which implies that it will have to sell 21,000 Model S in the second half of the year, a little more than 60% of the total. However if Tesla Motors is able to sell just 6,500 units in the second quarter then 63% of the year’s total will have to be achieved in the second half. The path down the second half for Tesla would become easier if it achieves the second quarter target of 7,500 deliveries, according to Maurer. “That’s why Q2 could be the make or break quarter,” according to Maurer.

Caution suggested

Maurer notes that investors should be cautious after the recent rally in the stock. Author says that the analysts are concerned that how the company would hit its target of 7,500 deliveries and this quarter could be a “make or break” for Tesla’s 2014 vision. Short interest has dropped down marginally. Maurer stated that Tesla Motors is trading above a comfortable range of $180 to $200, and is approaching $250 again, therefore “caution is justified and a short position may be the best thing.”

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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