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Tesla: Disaster Averted For Now

Aug. 01, 2018 6:38 PM ETTesla, Inc. (TSLA)658 Comments
Bill Maurer profile picture
Bill Maurer


  • Top line beat as expected, but bottom line missed estimates.
  • Capital expenditures forecast slashed again.
  • Company continuing to walk financial tightrope.

After the bell on Wednesday, we received second quarter results from Tesla (NASDAQ:TSLA), detailed in this shareholder letter. The electric vehicle maker has been one of the most talked about stocks this year as it looks to ramp Model 3 production, but it has continued to fall short of expectations and the financial situation has deteriorated. In the end, Tesla remains in a tricky situation, with high hopes for the remainder of the year.

As I mentioned in my earnings preview article, the street continued to cut its Q2 forecasts almost daily into this report as seen the charts below. That set up the eighth-straight quarterly revenue beat, with Tesla coming in just more than $4 billion. However, the non-GAAP loss of $3.06 was worse than street expectations by about 15 cents.

(Source: Yahoo Finance analyst estimates page)

Overall, Tesla's automotive sales came in a little less than I expected, but lease revenues were about 20% more than my forecast. The main reason that Tesla missed my forecast for $4.057 billion was a big miss on energy revenues, about $55 million, as energy deployments declined significantly from Q1 levels. Tesla service and other revenues also came in lighter than I expected by about $30 million, not showing much progress from Q1 despite the massive increase in deliveries during the quarter.

On the cost site, Tesla's gross margins where better than expected in all segments except service and other. Tesla got to positive gross margins for the Model 3 in Q2 and expects to get to around 15% this quarter. In the Q1 shareholder letter, management said that losses in the service/other category would significantly improve in the coming quarters, but the chart below shows a much different story so far.

Tesla took a bath on the operating line. Not only did

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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