Tesla Earnings Were a Mess -- 3 Reasons to Stay Bearish on the Stock

Tesla's stock is all over the map after second quarter earnings Wednesday. But the bears still have a good case on the stock.
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The bears still have a strong case despite a well-received second quarter on Wednesday. 

Besides Tesla (TSLA) - Get Report missing bottom line forecasts -- posting a loss of $3.06 a share vs. estimates for a loss of $2.90 a share -- Tesla's report revealed three key concerns. But Wall Street chose to ignore them, sending shares up 9% in pre-market trading Thursday.  

Concerns

    Tesla burned through $1.5 billion in cash in the first six months of the year. Despite Tesla saying it's keeping a watchful eye on capital expenditures, it still only ended the quarter with $2.2 billion in cash. In other words, Tesla may have to raise money at some point this year to fund its business. 

    Tesla seemed to back off an earlier call of achieving profitability in the third quarter. "In the second half of 2018, we expect, for the first time in our history, to become both sustainably profitable and cash flow positive," Tesla said on its earnings press release. The company may be banking on a big fourth quarter.

    Tesla said it will raise money to fund its new Gigafactory in China. Said Tesla, "Construction is expected to start within the next few quarters, though our initial investment will not start in any significant way until 2019, with much of it expected to be funded through local debt." 

    Read more on Tesla's future from TheStreet here.