Although the stock is up 38% year to date, Tesla has lost 22% of its value since shares peaked at $265 in February. But Tesla hasn't done anything different to deserve the punishment. Investors have, seemingly, shifted gears favoring value of growth.
Part of the problem is the confusion that comes with owning this stock. While Tesla's technological capabilities fit well within the realm of Silicon Valley, some investors insist on comparing the company with Detroit's finest in Ford (F) and General Motors (GM). As it stands, no one truly knows how to value the stock.
But that hasn't stopped everyone from offering an opinion, including Steve Cannon, head of Mercedes-Benz USA, who in criticizing Tesla CEO Elon Musk said that the company has "no network." Cannon also described Tesla stores as little shops that don't have service capacity." Others have taken the time to weigh in as well.
Even with the stock's recent decline, Rich Ross, chief market technician of Auerbach Grayson, doesn't believe it's time to take the risk. Ross thinks Tesla fits the criteria of a falling knife and could eventually reach $150 per share, or 27% lower than Tuesday's closing price.
All told, there are many question marks with Tesla's future. And Elon Musk will be pressed for clarity Wednesday when he announces the company's results. And it's not a good sign that expectations have been lowered ahead of the report.
The Street will be looking for earnings of 10 cents per share, 3 cents lower than estimates were 30 days ago. Last year, Tesla posted earnings of 12 cents per share. For the full year, analysts are expecting earnings of $1.78 per share, which would represent a strong year-over-year jump of 128%. And therein lies some of the confusion. As strong as that number appears, it can't be and won't be sustained.
In terms of revenue, the Street are modeling for $699.1 million, a year-over-year jump of 24%. Last year, Tesla posted revenue of $561.8 million. For the year, revenue is projected to roll in at $3.65 billion.
Despite the recent concerns, it's not as if Tesla has stalled. The company has reported strong revenue growth for three consecutive quarters, including a 10% jump in the February quarter. That revenue is still accelerating should be seen as a positive sign.