Tesla (TSLA) Stock Takes a Shot From Lowered Forecast

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The eager anticipation of a Tesla Motors (TSLA) earnings release reminds me of my Army paratrooper days. You go up in the C-130 cargo plane, and then you stand in the door and jump out. Hopefully, your chute will deploy, you’ll land without injury — and nobody will be shooting at you when you’re on the ground.

Tesla stock

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As a TSLA stock holder, as well as a Tesla bull, Wednesday evening’s second-quarter earnings release was like a paratrooper taking enemy fire.

Although the electric car maker’s top and bottom lines actually bested Wall Street expectations (revenue of $1.2 billion and an adjusted quarterly loss of $61 million, or 48 cents a share, beat expectations for revenue of $1.19 billion and a 60-cent loss), the unfriendly fire came via the lowered full-year sales forecast.

Tesla now says it aims to deliver just 50,000 to 55,000 vehicles this year, compared with a previous target of the full 55,000. The company also said it sees third-quarter production and deliveries of some 12,000 vehicles.

Here’s the excerpt from Tesla’s shareholder letter that’s got me feeling under fire:

“We are now targeting deliveries of between 50,000 and 55,000 Model S and Model X cars in 2015. While our equipment installation and final testing of Model X is going well, there are many dependencies that could influence our Q4 production and deliveries.

We are still testing the ability of many suppliers to deliver high quality production parts in quantities sufficient to meet our planned production ramp. Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter.”

This paragraph tells me that the company is giving itself some wiggle room when it comes to both Model S sales and the introductory sales of the Model X all-electric crossover.

Too much wiggle room doesn’t go over very big on Wall Street, especially in a stock that’s been one of the best momentum stories of the 21st century. The result was TSLA stock getting sold off by some 5% in Wednesday’s after-hours trade.

Still, even with Wednesday’s evening haircut, TSLA shares are up some 14% year-to-date, and for the past five years, shares are up an incredible 1,200%.

Yet it is precisely such things as downward revisions to overall sales numbers that could be the bearish catalyst that ignites a Tesla stock meltdown.

If we see a material break in TSLA stock to say, below $250, I might start to worry about the shares for the rest of the year.

For now, I am staying bullish on TSLA as I believe in the product, the company’s strategy and the genius of CEO Elon Musk.

Of course, if things really get dicey, I wouldn’t hesitate to pick up my $80 cost basis and go home.

As of this writing, Jim Woods was long TSLA.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/08/tesla-tsla-stock-lowered-forecast/.

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