Posted May 07, 2019
By Ray Blanco
Apocalypse Averted for Tesla
Earnings season is just about in the books. The last of Q1s reports will come in through Friday. Im sure well have some more surprises before we wrap.
But before we move onto other pastures we have one more company to feature.
Tesla Inc. (NASDAQ: TSLA) stole the spotlight this earnings season after reporting an eye-popping quarterly loss of more than $700 million.
Wall Street was already bracing for what one analyst called an apocalyptic quarter but the results were still far worse than expected, CNN reports. While the company has posted big losses of this size before, analysts surveyed by Refinitiv predicted that Tesla would be about $301 million in the red for the quarter. The actual number was more than double that amount.
Musk Remains Unfazed
Of course, the always-controversial Elon Musk came out swinging during the conference call, painting a bright future for his electric car company. Demand for every Tesla model is strong, he claims, and untapped international markets should provide future growth.
These rosy predictions dont change the fact that deliveries are way down this year. And Teslas big whiff on revenue and its nasty $702 million loss will give the bears plenty to chew on until the next wave of Tesla gossip hits the wire.
But the most interesting subplot of the latest episode of the Tesla soap opera was the stocks reaction post-earnings. The stock pinballed between $250265 immediately following the earnings release and then settled.
The options market was pointing to a move of more than 8% following the earnings announcement, according to CNBC. Tesla shares had other plans, opening lower by about $2. Go figure
Yes, the chart is completely hideous. But a big bounce here wouldnt surprise me, either.
In fact, flashing forward to today...
Tesla Inc. Fanatics Rejoice!
The controversial electric car stock halted its slide last Thursday after management filed for a $650 million stock offering.
Thats right: Tesla essentially admitted it desperately needs cash and the stock promptly rallied more than 4%.
A rational investor would probably assume a stock would tank after announcing a plan to offer 2.7 million shares of additional common stock, even if Elon Musk is going to fork over $10 million for some of those shares.
Unfortunately, the stock market is not a rational place. Maybe shareholders are interpreting Teslas fundraising efforts as a bizarre show of honesty or an admission that the business needs to improve. But aside from polling his Twitter followers about the existence of alternate futures and timelines, Elon Musk hasnt uttered a peep about the planned offering.
Either way, last weeks rally might turn into nothing but a brief reprieve for Tesla shares.
This is still one ugly chart:
Ill let the fanatics duke this one out while we seek out better opportunities elsewhere
You should, too. More on your best alternative to Tesla in the electric vehicle (EV) space later this week from Ray.
For Technology Profits Daily,
Greg GuenthnerChief Trading Expert