Even before Tesla’s earnings miss yesterday, shares of the electric vehicle company had cooled off. The TSLA stock price more than quadrupled in 2013 and soared another 47% in 2014, but several recent high-profile concerns brought the stock back down to earth.
Since hitting all-time highs near $300 per share in September, TSLA stock has cratered more than 20%, underperforming the S&P 500 (INDEXSP:.INX) by nearly 25 percentage points.
With TSLA stock off as much as 9% in early-morning trading after its earnings miss, the selloff is only getting worse.
Abandon Ship on TSLA Stock After Horrendous Quarter
Analysts expected Tesla to report earnings per share of 31 cents in the fourth quarter. Missing by a mile, TSLA posted a 13-cent EPS loss. The company also failed to reach its already-lowered full-year vehicle delivery quota of 33,000, delivering just 32,733 vehicles.
In a letter to shareholders, CEO Elon Musk and CFO Deepak Ahuja blamed the low deliveries on, basically, TSLA’s commitment to excellence. It’s like when you’re asked in a job interview what your biggest flaw is and you respond, “People say I work too hard.”
In the authors’ own words:
“…we held back release of our Performance All-Wheel Drive Dual Motor car (P85D) to ensure it would be a truly great experience for owners.
While we were able to recover the lost production by end of the quarter, delivering those cars was physically impossible due to a combination of customers being on vacation, severe winter weather and shipping problems (with actual ships). As a result, about 1,400 vehicles slipped December and were delivered in Q1.”
Really, Elon? You’re blaming your delivery shortfall on vacationing customers and weather? Was there no sense of irony when you championed the Tesla P85D on the very next page as a groundbreaking car with “great handling in all conditions” and displayed the vehicle driving casually on an un-plowed, snow-filled mountain road?
It hurts, but it’s time to bite the bullet on TSLA stock. When your CEO starts firing off lame excuses to explain a bad quarter investors should see nothing but a big, red flag.
TSLA stock is set to plunge further from here. Poor sales in China are weighing on results. A strong dollar is hurting international revenues. And let’s not forget Musk’s estimate that TSLA won’t be truly profitable until 2020, or the hydrogen fuel-cell car on the way from Toyota Motor Corp (ADR) (NYSE:TM) that could threaten the more affordable Model 3 sedan when it drops in 2020.
No one likes to sell stock on a down day, but when there are so many down days to come, it’s not such a bad move.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.