After the closing bell on Wednesday, Tesla Inc (NASDAQ:TSLA) reported better-than-expected results for the first quarter of 2018. The electric carmaker outpaced the earnings and revenue estimates and promised to be profitable in the second half of the year with the Model 3 production target on track.
Tesla Q1 in Focus
Adjusted loss per share came in at $3.35, narrower than the Zacks Consensus Estimate of a loss of $3.37 but wider than the year-ago loss of $1.33 cents per share. Revenues climbed 19% to $3.41 billion and edged past the Zacks Consensus Estimate of $33.17 billion.
Last month, Tesla revealed that it had produced 34,494 vehicles (24,728 Model S and Model X combined, and 9,766 Model 3) during Q1, up 40% from the fourth quarter. Tesla noted that this was “by far” its most productive quarter in its history. However, it missed the Model 3 production targets for the final week of the first quarter by producing 2,020 sedans against the goal of 2,500.
In the first two weeks of April, Tesla produced a record 2,270 Model 3 sedans but halted production in third week to enable higher levels of output. The company reiterated its plans to produce 5,000 Model 3 cars per week by the end of June and cited another production halt in the second quarter.
And if it can hit this production target, Tesla projects that it will become profitable in the second half of 2018. It also reduced its capital expenditures projection for the year to $3 billion from $3.4 billion.
On the flipside, Tesla delayed its production target for the upcoming Model Y crossover SUV to until 2020 from November 2019.
Shares of Tesla initially rose following the narrower-than-expected loss but then tumbled to more than 6% in late aftermarket trading. Tesla currently has a Zacks Rank #3 (Hold) and a VGM Score of F.
ETFs to Watch
Tesla earnings have put the spotlight on ETFs having substantial allocation to it. Below we highlight five ETFs that could be great plays for investors to tap this luxury carmaker’s upcoming growth.
ETFs to Ride on Tesla Q1 Growth Story: ARK Industrial Innovation ETF (ARKQ)
ARK Industrial Innovation ETF (NYSEARCA:ARKQ) is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvement and advancements in scientific research related to robotics, energy storage, innovative materials, alternative energy sources, infrastructure development, space exploration, autonomous vehicles and 3D printing.
This approach results in a basket of 40 stocks, with TSLA occupying the top spot holding 11.8%. The product has accumulated $151.3 million in its asset base and charges 75 bps in fees per year. It sees lower volume of about 49,000 shares a day.
ETFs to Ride on Tesla Q1 Growth Story: VanEck Vectors Global Alternative Energy ETF (GEX)
The VanEck Vectors Global Alternative Energy ETF (NYSEARCA:GEX) tracks the Ardour Global Index Extra Liquid, focusing on global companies that are primarily engaged in the business of alternative energy. The fund holds about 31 stocks in its basket with AUM of $89.9 million, while charges 63 bps in fees per year.
Average daily volume is paltry at about 5,000 shares. Tesla occupies the fourth position in the basket, with 8.3% allocation. In terms of country exposure, the fund is skewed toward the United States with 57.5% share, while Denmark and China round off the top three spots.
ETFs to Ride on Tesla Q1 Growth Story: ARK Innovation ETF (ARKK)
Like ARKQ, the ARK Innovation ETF (NYSEARCA:ARKK) is also an actively managed fund and follows the same strategy but provides exposure to genomic companies, industrial innovation companies or Web x.0 companies.
In total, the fund holds 45 securities in its basket, with Tesla occupying the top position, holding 7.8% share. The product has accumulated $716.9 million in its asset base and trades in a good volume of about 348,000 shares. Expense ratio comes in at 0.75%.
ETFs to Ride on Tesla Q1 Growth Story: First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
The First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN) tracks the Nasdaq Clean Edge Green Energy Index and manages assets worth $90 million. It charges 60 bps in fees per year while trades in a light volume of around 27,000 shares per day.
In total, the product holds 39 U.S. securities with Tesla Motors taking the third spot at 7.2%. Semiconductors dominate this ETF, accounting for 27.6% of the assets while renewable energy equipment, electrical components & equipment, specialty chemicals and alternative electricity round off the next four spots with a double-digit allocation each.
ETFs to Ride on Tesla Q1 Growth Story: ARK Web x.0 ETF (ARKW)
The ARK Web x.0 ETF (NYSEARCA:ARKW) is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services.
The fund holds 42 stocks in its basket, with Tesla occupying the third position at 5.5%. The ETF has amassed $468.7 million in its asset base and trades in a good average daily volume of around 230,000 shares. The expense ratio comes in at 0.75%.
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