- Tesla reports its highly anticipated second quarter earnings on Wednesday after the market closes.
- The report comes after the automaker’s second-quarter vehicle delivery numbers exceeded Wall Street expectations.
- Investors and analysts will be watching to see if Tesla can make a profit this quarter. Doing so will have met the last criteria for inclusion in the S&P 500 Index.
- This is what four analysts said before Tesla’s earnings.
- See how Tesla operates live on Markets Insider.
- Read more on Business Insider.
Tesla will report its second-quarter 2020 earnings on Wednesday after the closing bell in New York, and all eyes are watching the company’s ability to make a profit amid the coronavirus pandemic.
If Tesla does report its fourth consecutive quarterly profit on Wednesday, it will have met all the criteria for a possible inclusion in the popular S&P 500 index.
Here are the key numbers analysts surveyed by Bloomberg expect:
- Adjusted earnings per share: -14 cents, expected
- Income: $ 5.19 billion, expected
If Tesla doesn’t hit the profit target, its epic stock rally that made it the world’s most valuable automaker this year could be in jeopardy. The automaker’s shares have risen as much as 292% this year through Monday’s close, following better-than-expected second-quarter vehicle delivery numbers that came even as the coronavirus pandemic forced its Fremont factory to close. , California, for most of the quarter. .
Since then, stocks have continued to climb to new highs amid a series of Wall Street updates, the announcement of their upcoming Battery Day event and optimism for the S&P 500’s inclusion. Plus, bearish bets against Tesla as well. They reached a record: Tesla was slated to become the first company with a short $ 20 billion bet against it.
This is what four analysts say about Tesla before its earnings release.
1. Wedbush: Tesla has “run smoothly this quarter”
Target price: $ 1,250
Classification: Neutral
“While street numbers are all over the map and looking for red ink this quarter, we are modeling profitability with the 90k delivery number and GM’s continued efficiency / cost reduction keeping Musk & Co. away from the ink red, “wrote Daniel Ives of Wedbush in a note Monday
Despite the fact that Tesla faced a “dark macro backdrop and storm clouds COVID”, it has “run smoothly this quarter posting 90,000 deliveries and crushing street expectations in Aaron Judge’s home run fashion “said Ives. Investors will focus on Q2 profitability, China’s delivery trajectory, Model 3 demand outlook, and any clues to the Battery Day announcements.
“Simply put, success in China outside the gates is a major achievement for Tesla and if this trajectory continues it will be a ‘game changer’ for its history of electric vehicle penetration in the next decade.”
2. JMP Securities: “Any mid-term success that TSLA may discuss during its earnings call tomorrow is now largely reflected in the share price.”
Target price: $ 1,500
Classification: Market perform
“We believe that any medium-term success that TSLA may discuss during its earnings call tomorrow is now largely reflected in the share price,” wrote Joe Osha of JMP Securities in a note Tuesday lowering Tesla’s rating for the market.
Osha wrote that he expects Tesla “to show progress on several fronts” when it reports earnings on Wednesday, even at higher gross margins. JMP also expects Tesla to deliver approximately 435,000 units per year, and its Shanghai factory to provide additional capacity to meet any demand.
“All of this progress makes the investment decision challenging,” Osha wrote. “We continue to believe that TSLA makes the best battery electric vehicles on the market, and aside from Volkswagen, it is not even clear to us who can offer viable competition.”
Still, he added: “However, stocks have reached our target level and we believe investors face challenges in obtaining additional returns from here.”
Read more: A $ 47 billion fund manager shares 3 trades it is making upward as the economy recovers, including a play on the Tesla-led electric vehicle boom
3. Deutsche Bank: “Tesla shares have apparently hit new record highs every day”
Target price: $ 1,000
Classification: To hold
Deutsche Bank raised its Tesla price target to $ 1,000 after the company’s better-than-expected second-quarter delivery numbers.
“Tesla stocks have apparently been hitting new all-time highs every day, supported by leaks from the strong Q2 and possible inclusion in the S&P 500 and overall by very positive investor sentiment towards electrification, which it is likely generating large flows of ESG-driven funds that have limited options in the public markets, “Emmanuel Rosner wrote in a July 6 note.
By factoring in better volumes, Rosner raised its second-quarter revenue forecast to $ 5.84 billion from $ 4.97 billion, “suggesting that Tesla could achieve GAAP profitability in the quarter that would meet the latest criteria for its inclusion in the S&P 500, “he said.
4. CFRA: “Shares have moved ahead of underlying fundamentals”
Target price:$ 1,100
Classification: To sell
“We believe TSLA’s actions have been ahead of the underlying fundamentals and do not adequately reflect various risks surrounding history, including the fact that TSLA is entering a significant spending cycle with the construction of Gigafactories 4 and 5, which we expect act as a significant drag on free cash flow in the coming quarters, “Garrett Nelson of CFRA wrote in a note Friday.
“Also, we see the Model Y price decline as a red flag and we see the potential for a capital offering given the meteoric advance of the stock, and we note that TSLA issued capital in February at $ 767 / sh, about half of its current price, “he said. additional.
“Finally, we believe that stocks have benefited from short-term hedging (current short-term interest of 7.5% has dropped from 23.2% a year ago) and speculation that it will post a second GAAP gain quarter next week and will be eligible for listing the S&P 500 (which will trigger an index fund) to buy), but this is far from guaranteed. “
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