In the run up to the release of the Q2 earnings report, it appears that Tesla must meet analysts expectations regarding the Model 3 in order to prohibit its stock valuation from dipping
With the first batch of highly-anticipated Model 3 Sedans being delivered on Friday July 28th, there remains a great deal of speculation over the valuation of Elon Musk’s Tesla (NASDAQ:TSLA). Additionally, the company is scheduled to report second-quarter results after market close on August 2nd, which will paint a clearer picture as to Tesla’s future prospects.
Although Wall Street expects another loss for the Silicon Valley company, the real burning questions are the ones surrounding Model 3 shipment estimates, which will be the biggest test to Tesla’s stability yet. That is, the stock’s success hinges heavily on the Model 3 release, as if history is anything to go by and Tesla fails to meet Wall Street estimates with regards to units shipped, the company’s share price will nosedive.
So, in anticipation of the release of the Model 3, and the subsequent Q2 earnings report scheduled for the beginning of next month, FactSet have compiled together analysts expectations regarding Tesla’s anticipated performance.
On the earnings front, analysts tracking the stock expect Tesla to report a loss of $2.38 a share in the second quarter, which would compare with a loss of $2.09 a share in the second quarter of 2016. The company is expected to report an adjusted loss of $1.85 a share for Q2.
What’s more, the same analysts forecast sales of $2.54 billion in the second quarter, which would exceed sales of $1.56 billion in the second quarter of last year, but would be a slight dip from the $2.7 billion turned over in the first quarter of this year.
With regards to share price, Tesla soared to record highs in May and June after the company reported first-quarter sales numbers above Wall Street expectations, fueling hopes that the Model 3 would be a success. That culminated with a record close of $383.45 reached on June 23rd, the same day the stock hit an intraday high of $386.99.
However, earlier this month, after Tesla reported that it sold fewer vehicles in the first quarter than Wall Street had anticipated, the stock began to retreat. Additionally, Tesla flirted with bear-market territory earlier in July, when it began trading as low as $306 per share. As such, shares are currently about 11% down from their high-water mark set on June 23rd.
Yet still, Tesla shares are up 60% so far this year, significantly outperforming the S&P 500 index which has gained just 11%. What’s more, the company’s outperformance still holds in a three-month period, with Tesla stock up more than 10% to the benchmark’s 3.9% rise.
Nevertheless, history makes it apparent that Tesla must meet Wall Street analysts expectations in the soon-to-be-unveiled Q2 earnings report in order to keep its stock soaring high.
(Kathleen Craig, Research)
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