Tesla Inc (TSLA) Q2 Earnings Preview: More Than A Model 3 Circus?

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Tesla Inc (TSLA) Q2 Earnings Preview: More Than A Model 3 Circus?
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Tesla Inc (TSLA) Q2 2017 earnings are due after closing bell tomorrow, and Wall Street is expecting yet another quarter of huge losses. Consensus estimates currently stand at adjusted losses of $1.88 per share on $2.5 billion in sales.

Tesla Inc (TSLA) Q2 2017 earnings

On a GAAP basis, Tesla Inc (TSLA) Q2 2017 earnings are expected to be $2.39 per share in losses, compared to the year-ago quarter’s $2.09 per share in GAAP losses. Earlier this month, the EV maker reported that it had delivered more than 22,000 vehicles during the second quarter and had about another 3,500 vehicles in transit to their owners.

The company only added the transit number later after analysts from multiple firms questioned why it had not released that number because it usually does. Additionally, Wall Street had been expecting a slightly higher deliver number than what Tesla Inc (TSLA) reported. Because of the miss on deliveries, Tesla shares have tripped up after an immense tear this year, although even so, the stock is still up by about 50% for the year.

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The Model 3 could be the star of the show

The Model 3 is likely to be the star of the Tesla Q2 2017 earnings report, even though it had no impact on the company’s second quarter. Tesla delivered the first 30 cars in late July, but with its continuing losses, management could focus on the Model 3, which most bulls are hyper-focused on anyway. The automaker released its production ramp schedule, and according to it, those who ordered the most expensive models with premium features can expect priority, even if they ordered after buyers who ordered the base model.

We’re already hearing of some problems with the Model 3 process, unfortunately, even though we’re still sort of in the honeymoon period with the car. Bernstein analysts said in a report about the results of their July survey of Tesla Inc (TSLA) buyers that it sounds like many of them will be cancelling their orders. According to their findings, 30% of Model 3 reservation holders who participated in their survey were “unsure/ unlikely/ very unlikely” to take delivery of their car.

Tesla Inc (TSLA) management told reporters on Friday that they had taken 500,000 preorders for the Model 3, although interestingly, a spokesperson for the company later would not corroborate that claim, other than to say that CEO Elon Musk did indeed say that.

Tesla Inc (TSLA) survives on outside cash

Investing.com Senior Analyst Clement Thibault reported another problem with customer support and especially refunding the $1,000 deposit buyers had to pay in order to reserve a Model 3. He doesn’t see Tesla as a long or short position because the fundamentals aren’t there, but excitement is blindly carrying the stock along. Before he would go long, he says the automaker must start “acting like a self-reliant, profitable business.”

“It’s our view that nothing about Tesla’s financials or fundamentals right now justifies a price tag of $320 per share,” he told ValueWalk by email. “Not a single fundamental parameter. The company may be selling a few cars, but mostly it’s being powered by dreams. In three out of the past four quarters, Tesla needed outside money to survive — by the billions.”

Ahead of the Tesla Inc (TSLA) Q2 2017 earnings release, the automaker’s stock ticked higher in premarket trades, climbing by as much as 0.53% to $321.46. The shares closed down 1.21% on Tuesday.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at [email protected]
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