Tesla Inc (NASDAQ:TSLA) shares fell 5% on May 4 in the wake of earnings that disappointed analysts, but numbers would never satisfy the bears nor truly dismay the bulls, because TSLA stock is a story and not just a stock.
The Tesla story has something for both sides of America’s political divide, with just enough numbers to whet the appetite for more.
The latest quarter saw car sales of $2.3 billion, up 15% from last quarter, with a 27.6% gross margin, along with solar panel and battery revenue of $213.94 million, up 63% from the last quarter, and margins of 29%. Taken together, there was a loss of $330.2 million, $2.04 per share of TSLA stock, on revenue of $2.696 billion.
The verdict from analysts was that Musk offered big promises but no profits. There was disappointment that the Model Y, a compact SUV, will require a different production platform from the low-cost Model 3 sedan.
None of that matters for Tesla stock.
The TSLA Stock Story
Elon Musk himself is the kind of business hero made a trope by writers ranging from Ian Fleming to Allen Steele and Ayn Rand — a heroic immigrant who takes huge risks and plays by his own rules.
America is filled with real-life examples. Henry Ford was the son of an Irish immigrant. Steve Jobs was the adopted son of a Syrian immigrant. Musk himself was born in South Africa.
As a company, Tesla features tropes from Isaac Asimov and Robert Heinlein, sleek electric cars powered by the sun and reusable rockets, with a little Stewart Brand and a Steely Dan riff thrown in for good measure.
In short, TSLA stock is an industrial romance, a science fiction tale, a uniquely American story you don’t want to put down. If it doesn’t go completely bust, there’s always going to be lift to the stock.
The Numbers Behind Tesla Stock
I think I was right. But you can make money on both sides of the TSLA trade and so long as Musk can keep attracting capital by growing revenue and telling exciting stories about tomorrow, the story will continue.
What caused Tesla stock’s most recent fall was the second-quarter outlook. Only 47,000 to 50,000 cars will go out by June, the Model 3 not going into production until July and non-GAAP margins will decline 2.5% with $2 billion in capital expended, and $115 million of new interest expense from the convertible securities sold in the first quarter to create that capital.