I have no position in (TSLA - Get Report) . That could change prior to the close. Regularly I get this close to the firm's earnings release with no position in hand. I have never been long this name. I have often been short the name, and often profited from the short, but not always. I do not like managing a position in this name. It is always stressful.
Expectations for tonight's Q1 release are for an adjusted loss of $3.50-ish per share. Whispers are generally running at a slightly greater losses than that, however. I have seen analyst expectations for this loss at levels as optimistic as $-2.60, and as pessimistic as to approach negative five bucks. Revenue is expected to print somewhere between $3.1B and $3.25B, but does anyone really know? The catch is that despite awful fundamentals, and twelve month equity performance of almost -5%, the name retains a cult following. People believe that this name represents the future. Who am I to argue? That said, from here it would appear that this stock is priced as if TSLA will have a monopoly if and when electric vehicles become the widespread norm. We all know that won't happen, and really, it takes a lot of either guts, or tolerance for risk to ignore those already mentioned fundamentals.
Honestly gang, except for the persistent losses, incredibly weak Current and Quick Ratios, contracting Gross Profit and Operating Margins, horrendous cash flows, and rising interest costs, I don't see what's so attractive. Maybe the promise of increasing production of the Model 3 to somewhere between 3k and 4k a week sometime this month, and targeting 6k a week by years end is enough? Maybe a corporate front man famous for both clowning around, as well as raising money when it's most needed is enough? Much will be covered tonight. Only two things will truly matter to investors and traders.
1) Production. Progress on moving the Model 3 to the public. and a timeline for the firm's other products such as the Semi that they need to start delivering by 2020. By the way, though there are plenty of pre-orders for that Semi, TSLA is currently being sued for patent infringement to the tune of $2B by Nikola Motor Co, a start-up with plans to build a startlingly similar looking vehicle.
2) Cash Burn. The questions here are fourfold.
- Will the firm run out of capital?
- If so, when?
- Does the "money man" tap debt markets yet again?
- If that is not possible, or affordable, does the firm resort to diluting the shares?