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Tesla: How Q2 Could Get Worse

Jun. 02, 2020 6:37 PM ETTesla, Inc. (TSLA)F381 Comments
Bill Maurer profile picture
Bill Maurer


  • Revenues projected to fall by nearly 25% year over year.
  • Demand in question due to price cuts, delivery estimate timelines.
  • US Dollar strength an added headwind, especially as China ramps.

It's not really a surprise that Q2 results for electric vehicle maker Tesla (NASDAQ:TSLA) are not likely to look good. With the coronavirus pandemic shutting down the Fremont factory for roughly half the quarter, production will certainly be impacted. On the other side of things, global economies showing massive GDP declines are leading to significant reductions in consumer spending. As bad as the quarter looks to be so far, there are still a few things that could make things worse during the last month of this period.

In the chart below, I wanted to show how the revenue figure for the period looks in comparison to the past five years. As you can see, Q2 2020 would be only the second quarter in this period where the top line decreased, and three of the weakest four growth periods would be in the past 12 months. Some growth is expected to resume rather quickly, however, with the current expectation that both Q3 and Q4 of this year will see year over year revenue increases of more than 15% each, but those numbers would still be well below the longer-term average.

(*Current street average estimate. Source: Seeking Alpha earnings page)

I want to start with perhaps the second biggest risk to Tesla's results in the short term, and that is a lack of demand. The production-constrained narrative from the bull camp has all but been destroyed for now it seems. On Tesla's Model 3 order page, delivery estimates for the US East Coast are down to 2-4 weeks for the Standard Range Plus variant, and 1-4 weeks for the high-end Performance version. When you consider the time needed just to produce a vehicle and ship it across the country, this would seem to imply that demand is rather low. The recent

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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, and no plans to initiate any positions within 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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