Tesla Motors Inc: TSLA Stock NEEDS to Deliver on Its Bullish Forecast

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Tesla Motors Inc (TSLA) CEO Elon Musk really needs to learn how to under-promise and over-deliver. The CEO’s upbeat forecast sparked a rally in TSLA stock after earnings, but how often does Tesla hit its targets?

Tesla Motors Inc: TSLA Stock NEEDS to Deliver on Its Bullish ForecastSometimes, just barely.

Take the most recent Tesla earnings report: Tesla’s fourth-quarter net loss widened to $2.44 a share from a net loss of 86 cents in the year-ago period.

But here’s the ugly part: On an adjusted basis — which is what analysts and the market really care about — Tesla booked a loss of 87 cents a share. That missed Wall Street forecasts by a chasm.

Analysts, on average, were looking for earnings of 10 cents a share, according to a survey by Thomson Reuters. Even the most pessimistic analyst on the Street thought the loss would come to only 58 cents a share. Revenue rose nearly 60% to $1.75 billion, but that likewise missed the Street forecast, which stood at $1.79 billion.

Now, of course none of this really matters. Just look at the jump in TSLA stock following the report.

That’s because at this point, TSLA lives and dies by developments with the flagship Tesla Model X SUV and Tesla Model 3 mass market vehicle. On those counts, the company told investors what they needed to hear about things like cash flow, profitability and capital, among other worries.

TSLA: Don’t Make Promises You Can’t Keep

This all well and good, but why should the market have faith in TSLA projections?

It’s said that a CEO’s No. 1 job is to manage investors’ expectations. In that regard, Musk is failing; and it makes the current action in Tesla stock feel like a relief rally more than sober repricing of shares.

After all, TSLA stock fell 40% for the year-to-date, hurt by missed deadlines and delivery figures that barely kept up with promises, among other issues. It’s not unusual for a beating like that to spring-load a stock for big — if brief — pop before skepticism creeps back into the Tesla stock price.

So don’t be surprised if TSLA stock goes back to struggling soon.

The bottom line is that as encouraging as the outlook is — and it does sound pretty darn good — Tesla Motors has to deliver on its promises consistently to stay in the market’s good graces.

Given his track record, Musk probably should have set a lower bar. Of course, if Tesla does hit its numbers, look out.

It’s just hard to give Musk the benefit of the doubt.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/tsla-stock-tesla-motors-earnings/.

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