Reports Q1 2020 results on Wednesday, April 29, after the market closes
Yield forecast: $ 6.03 billion
EPS expectation: $ -1.08
The time has finally come for the market to know whether this year's powerful rally in Tesla (NASDAQ 🙂 shares is actually justified. Shares of the electric vehicle maker defied all opportunities amid the COVID-19 pandemic and showed strong resilience in 2020, rewarding investors who believe in CEO Elon Musk's ambitious growth plans.
TSLA Weekly TTM
Driven by this strong bullish sentiment, the Tesla stock has gained more than 80% this year and more than doubled since the close of March 18. That upswing has placed Tesla in the elite group of megacap technology stocks, such as Amazon (NASDAQ 🙂 and Netflix (NASDAQ :), which emerged unscathed from the steepest market slide ever. The stock was down more than 3% yesterday to close the session at $ 769.12.
But to support overall momentum, Tesla must produce a burst quarter, surpassing analyst expectations.
In a recent report, Barclays said it expects Tesla to keep its full-year supply guidelines of 500,000 vehicles the same when it releases its revenues today, despite factory closings due to the pandemic. The Fremont, California production line will not be closed for long, Barclays predicted. Tesla cut off production at the factory in late March after government officials said it was not a critical issue. . Their note focused on a high of $ 864. Goldman analyst Mark Delaney wrote that Tesla, in his opinion, has a significant lead over other automakers in electric car-making and is expected to maintain a strong market position.
Tesla & # 39; s strong brand, vertical integration and early-mover advantage are key factors driving the company, which is active in an industry with generally long development cycles – it takes an average of two to four years to develop new models to roll out.
Competitors, on the other hand, struggle to survive in this difficult economic environment. Ford (NYSE 🙂 has already suspended his dividend. And last month, it pulled $ 15.4 billion from two lines of credit, helping the company endure months of uncertainty when it can resume vehicle production and sales. According to a report in Bloomberg, the Detroit auto maker can now save even more money to weather the crisis.
Investors became more confident in Tesla this month, after the automaker released a better-than-expected first quarter sales report, raising expectations that the company was in a stronger position to withstand the delay caused by the corona virus.
Tesla delivered 88,400 vehicles worldwide in the first quarter, down 21% from the last three months of 2019. But the total was still better than the average analyst estimate for approximately 78,100. Still, Caution Is Warranted. Musk – after years of promising and underachieving – was finally proven true to his word. The company beat the analyst and accelerated the introduction of the new Model Y crossover.
The completion of the Shanghai plant and the company's success in exceeding its ambitious goal of selling 360,000 vehicles for the year also gave a strong signal that Tesla could quickly become a meaningful player in the industry if it would continue to achieve its goals.
Needham analyst Rajvindra Gill believes it would be better to remain cautious with Tesla as demand for cars has largely collapsed in North America and Europe. In a note last month, Gill said:
“In the long term, we continue to expect margin pressure from declining sales of Model S & X vehicles with higher margins, a lower mix within Model 3, and competitive pressures from other automakers when they launch their electric vehicles over the next few years. ”
Bottom Line
Tesla's continued momentum certainly shows that the company is in a much better position to weather the current economic crisis than other car manufacturers. The company's first quarter earnings report today should show whether current optimism is supported by fundamental factors.
