Tesla (TSLA) is expected to report results on its second fiscal quarter on Monday, July 26, with a conference call scheduled for 5:30 pm EDT. What to watch for:
1. EARNINGS BEAT EXPECTED: Ahead of the company's quarterly results, Barclays analyst Brian Johnson said he is "bearish" on Tesla's valuation but sees an earnings beat this quarter. Conversations with investors indicate a "growing acceptance that the market 'is what it is' and that moves off of the price will be driven by earnings beats/revisions," Johnson told investors in a research note. Tesla may post an earning beat as price increases outweigh likely cost pressures, the analyst added. While he acknowledged the profit improvement from pricing moves in the second quarter and potential for near-term upside to the shares, Johnson believes "some of these will dissipate over time" and remains "stubbornly Underweight on valuation."
Also commenting on the upcoming results, Credit Suisse analyst Dan Levy said he is ahead of consensus into second quarter earnings per share for Tesla, with upside likely from gross margin. The analyst sees three key themes into the print, namely focus on capacity build-out, upside on gross margin, and status on FSD as he believes any traction on FSD is a positive for the stock. Levy has a Neutral rating and a price target of $800 on the shares.
2. PRODUCTION, DELIVERIES: Earlier this month, Tesla announced that in the second quarter the car maker produced 206,421 vehicles and delivered 201,250. Model S/X production was 2,340 and deliveries were 1,890. Model 3/Y production was 204,081 and deliveries were 199,360. The total subject to operating lease accounting was 7%. Tesla said, "Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct. Final numbers could vary by up to 0.5% or more."
Meanwhile, Fred Lambert of Electrek reported that deliveries of Tesla's Model S are currently on hold and it is not yet clear why. After months of delays, Tesla began delivering the new version of its Model S last month, but now several buyers have told Electrek and posted on forums that Tesla said there's a "hold" on delivering the new car. Tesla has not yet communicated to its buyers the reason for the hold or a new delivery date for the model.
During the company's last earnings call, Tesla backed its view for 2021 growth in vehicle deliveries above 50%. The company said that, "We plan to grow our manufacturing capacity as quickly as possible. Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In some years we may grow faster, which we expect to be the case in 2021… We expect our operating margin will continue to grow over time, continuing to reach industry-leading levels with capacity expansion and localization plans underway. We are currently building Model Y capacity at Gigafactory Berlin and Gigafactory Texas and remain on track to start production and deliveries from each location in 2021. Gigafactory Shanghai will continue to expand further over time. Tesla Semi deliveries will also begin in 2021."
3. BITCOIN PAYMENTS: Tesla CEO Elon Musk said the car maker will most likely restart accepting bitcoin as payments once the company performs due diligence on the amount of renewable energy used to mine the cryptocurrency, Reuters' Noor Zainab Hussain and Nivedita Balu reported. "I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting bitcoin" Musk said at the B Word conference. "Most likely the answer is that Tesla would resume accepting bitcoin." Tesla had suspended vehicle purchases using Bitcoin back in May.
Musk has also said that he and rocket company SpaceX own bitcoin, telling a panel that "I might pump, but I don't dump. I definitely do not believe in getting the price high and selling or anything like that," The Wall Street Journal's Rebecca Elliott reported. Musk didn't specify the size of his personal bitcoin holding or that of SpaceX, but Musk said he wasn't selling bitcoin, nor was SpaceX.
4. FACTORY PLANS: A Tesla factory to produce cars in India is "quite likely" if the electric automaker can first begin sales with imported vehicles, Bloomberg's Atul Prakash reported, citing Elon Musk. The carmaker is currently lobbying for lower taxes on imports as it considers plans to expand into India, one of the world's biggest emerging car markets, the author noted, citing people familiar with the matter.
Earlier this month, Morgan Stanley analyst Adam Jonas noted that Bloomberg quoted Indian Transport Minister Nitin Gadkari as having made comments at the India Global Forum that India is building electric charging stations along "select highways" and made references to Tesla potentially stepping up senior management recruiting in the country. Jonas, who argued that Tesla India is "going to start getting serious investor attention" in the coming months and quarters, pointed out that the firm's India team forecasts Indian battery electric vehicle volume to surpass 200,000 units by 2025 and for the Indian BEV market to account for 10% of global BEV volume by 2035.
Meanwhile, Tesla's $7B factory being built in Berlin is six months behind schedule, possibly more because construction on an adjacent factory has just begun, The New York Times' Christopher Schuetze and Jack Ewing reported, citing local officials. The assembly plant has strong support from political leaders, but has encountered legal challenges from environmental groups, delays in the approval process by agencies, and the carmaker's revisions to its own plan. The slipping start date could prove to be costly for Tesla, since it buys time for competing manufacturers to establish their own electric vehicle lineups.
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