Tesla (TSLA) Earnings Offer Something for Everyone

T.esla (TSLA) is one of the most talked about stocks in history. The buyers and backers are often passionate, committed to the vision of a world without gas-powered vehicles and the disruptive nature of a company with a vision and the courage to put their money where their mouth is. The critics are almost as passionate. They are appalled by the same courage and vision when it leads to unconventional decisions, and they are convinced that it is some kind of scam in which a shoe is about to fall (it’s worth noting that this supposed shoe is only in their imagination existed) far).

Whatever you think of the company or the stock, everyone agrees on one thing: Tesla is never boring. So it’s no wonder that the results for the first quarter of 2021, published yesterday after the closing bell, are proving to be controversial.

On the surface, they were great results. They were full of record numbers with net income of $ 438 million and revenue of 74% to $ 10.39 billion. That was a slight blow to expectations, as was the final EPS figure of 79 cents. Despite those impressive numbers, the stock fell quickly, trading almost four percent below yesterday’s closing price at the time of writing.

There is no doubt that “buy the rumor, sell the fact”. Good results were expected and traders who bought in anticipation of such a profit will take their profits with them. But there is something else here. Tesla deals in both feelings and opinions and data, and this report has fueled those sentiments and exaggerated those opinions. That’s obvious when you play around with the chartswhere massive volatility immediately upon release suggests that both sides initially found something to like here.

To the bears, the details of this report seemed to confirm their suspicions that Tesla isn’t actually a car company, just a series of happiness breaks and temporary money-making schemes. That $ 438 million GAAP profit included over $ 100 million from Bitcoin sales, while revenue was backed by sales of $ 518 million in regulatory loans owned by other automakers who failing to meet government emissions targets, buy some of Tesla’s “green” to make up for this shortfall.

“Look,” they say, “Tesla has been lucky again”.

Is it luck If so, it would inevitably run out at some point. However, after about a decade of taking risks and benefiting from them, it’s hard to say that this is just good luck. Perhaps there is some element to avoiding bad luck, but I remember the old quote usually written to Sam Goldwyn: “The harder I work, the happier I get.”

That it is a series of lucky breaks and temporary money-making systems is the charge its critics have made at the foot of Tesla, very often an accurate description of young, successful companies. It is the norm, not the exception, and it really is just wise and not deceptive or cynical to take advantage of what is available, be it the growing interest in digital currency or regulations that force competitors to use you for simply existing ones pay.

The bears seem to have had the upper hand in responding to these gains so far on the short-term chart, but here, too, there is a lot for the bulls to like from a longer-term perspective.

The fact that there have been no shipments of the new Model S Plaid, despite Elon Musk saying in January that shipments would begin in late February, is another element of the report that can be seen in two ways. The pessimistic view is obvious: Musk made a projection and Tesla literally couldn’t deliver. There are legitimate reasons for this, however. Supply chain issues have hurt every company for the past three months, especially those with technical prejudices, and even given that, Tesla has increased vehicle sales by more than 100% year over year. Obviously, the numbers for the first quarter of 2020 have been hit by Covid to some extent, but nonetheless, the impressive growth and impending push of the Plaid, as well as the return to production of the SUV Model X later in the year, will prove to be another engine of growth .

So Tesla’s Q1 2021 results offered something for everyone. The haters will feel that much of the success is down to luck and one-off factors, while believers will say that Tesla closed the quarter in record numbers and penalized the stock for making successful investments and receiving regulatory credit, who will likely undo the need for another capital increase anytime soon, are insane.

For the agnostic, the most important factor in displaying these numbers is what they say about the future, and that is positive news. Demand for the models hit by supply bottlenecks is pent up, making it likely we will see another big quarter in the second quarter, and the temporary positive results from Bitcoin sales and regulatory credit may come at a time of disruption be viewed as cheap bridges. On that basis, TSLA can be expected to return to profit soon after the earnings decline.

Do you want more from Martin? If you are familiar with Martin’s work, you will know that he offers the markets a unique perspective and actionable ideas from that perspective. As well as writing here, Martin writes a free weekly newsletter with detailed analysis and trading ideas that focus on just one sector that has underperformed lately and is rapidly on the rise. To learn more and to sign up for the free newsletter, Just click here.

The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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