The market may have been betting against Tesla Motors Inc (TSLA) heading into Wednesday’s after-market earnings release, concerned about the ill-timed exit of two key executives against the backdrop of bearish chatter from well-known short seller Jim Chanos.
After the closing bell rang, though — and after Tesla Motors reported results and commentary that didn’t throw investors any curveballs — traders couldn’t buy TSLA stock fast enough.
The 4.3% tumble Tesla shares took during the day’s normal trading hours was offset during the after-hours trading session.
Maybe TSLA stock is on the right track after all.
Tesla Motors Earnings
All told, Tesla Motors reported a loss of 57 cents per share on $1.6 billion worth of non-GAAP sales; GAAP sales were only $1.15 billion, accounting for the deferred revenue of lease agreements and resale-value agreements. Analysts had been calling for a loss of 60 cents per share of TSLA and revenue of $1.6 billion.
The per-share loss widened from the 36 cents per share the electric car maker lost in the same quarter a year earlier, while sales grew 45% on a year-over-year basis.
The carmaker also updated its Q1 delivery total of 14,810 vehicles, pretty much in line with the number released in early April.
Looking ahead, Tesla said it anticipates the delivery of 17,000 automobiles for the quarter currently underway, and still believes it will build between 80,000 and 90,000 electric vehicles this year. Analysts were expecting deliveries of 19,500 cars during the second quarter.
Even further down the road, CEO Elon Musk says the company will be able to build 500,000 automobiles per year by the year 2018, accelerating a previous schedule calling for that rate of output by 2020. Musk also acknowledged, however, the company will likely need to raise capital to expand its current production capacity to that level.
The timeline for production of the ballyhooed Model 3 wasn’t contracted, though — its first deliveries are still slated for late 2017.
TSLA Naysayer Silenced … For Now
The (mostly) encouraging news couldn’t have come at a better time for owners of TSLA stock. As the euphoria of a successful Model 3 pre-sales even waned, TSLA shares ended Wednesday’s regular trading session down 17% from its April 7 peak.
Wednesday’s leg of the move was at least partially inspired by Kynikos Associates’ Jim Chanos, who made it clear he was holding a short position in TSLA stock. He rationalized:
“One of our historical sign posts of a company in trouble is when numbers of senior people leave over a short period of time. Tesla fits that bill.”
Chanos was referencing the fact that Vice President of Manufacturing Josh Ensign and Vice President of Production Greg Reichow were both leaving the company. Ensign’s exit appeared to be a permanent move, while Reichow’s departure has so far been described a leave of absence. With no timeframe or explanation beyond that, though, it wasn’t difficult for Chanos or any other investor to presume the leave of absence could become permanent as well.
The loss of such key personnel at such a critical time in the company’s development do call into question the stability of the planned ramp-up in production capacity.
Bottom Line for TSLA Stock
While once again the rhetoric before and after Tesla Motors’ earnings reports made for good reading, nothing has changed the fact that TSLA is a story stock rather than a results-oriented trade. The bulls won the day because the bullish story-tellers told the most plausible tale.
Trading Tesla remains a psychological chess match for the time being, though … and could remain in that mode all the way through late 2017 when the company really hits the throttle on its output.
Chanos may be vindicated yet, perhaps more than once.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
