Reports Q2 2021 results on Monday, July 25, after market close
Expected Revenue: $11.53 Billion
EPS forecast: $0.936
Despite the turbulence in the past, Tesla (NASDAQ:) has been a great growth story for investors who have remained loyal to the electric car maker and its stocks. As of January of this year, shares of the Palo Alto, California-based EV manufacturer had risen more than 11 times since the March 2020 low.
Following this lightning-fast move, the trajectory for Tesla stocks and investors who own them has become uncertain due to mounting competitive threats from traditional automakers, signs of a potential slowdown in sales in China and an ongoing semiconductor shortage.
After hitting a record high of $900.40 on January 4 of this year, Tesla stock is down 28%, lagging vastly behind the broader market that has continued to rise during this period. The stock closed Friday at $643.38.
When Tesla releases its latest earnings report later today, founder and CEO Elon Musk will likely face questions about whether the EV automaker's best days are ahead from a growth perspective. ]
The company's latest production and delivery figures, released in early July, were encouraging. TSLA told investors it had shipped 201,250 cars worldwide in the second quarter, a record number for the company despite chip shortages and concerns about the slump in sales in the Chinese market. Despite record deliveries, CNBC noted, "deliveries fell slightly short of expectations."
The bulk of sales during the period were for the Model 3 sedan and the Model Y crossover, produced in Shanghai and Fremont. factories in California. Those countries are also Tesla's largest markets. This strong delivery performance is an indication that Musk is likely to report another strong quarter. Analyst consensus estimates on today's release also support that view. Tesla's earnings per share are likely to double from a year ago to $0.9364, while sales will increase 90% to $11.53 billion compared to the same period last year.
Yet, as noted earlier, Tesla's long-term outlook is becoming less attractive. It faces threats from automotive giants such as General Motors (NYSE:), Ford (NYSE:) and Volkswagen (OTC:), each launching its own line of electric vehicles. In China, Tesla's lead over other regional startups is already beginning to shrink. Despite Wall Street's optimistic estimates of second-quarter earnings, analysts remain deeply divided on Tesla's direction. earnings report, Goldman Sachs reiterated its buy call for Tesla and said it sees strong revenue and margin growth. In a note, the investment bank said:
"We have a Buy rating on TSLA stock as we expect higher volumes and the company's leadership in the fast-growing EV market to lead to strong revenue and margin growth."
Brian Johnson of Barclays, raising his second quarter earnings estimate for Tesla from $0.92 a share to $1.08 a share, said his stock is still not a buy. While Johnson maintained a 12-month price target of $230 on the stock, he also said:
"While we recognize earnings improvement from price movements in [the second quarter] and potential upside for the stock in the near term, we believe some of these will fade over time and remain stubbornly underweight in valuation."
Over time, analysts' outlook for the stock is also mixed.
Chart: Investing.com
Based on an Investing.com survey of 35 analysts, respondents gave a neutral view on equities, with the majority seeing a 7% upward target for the next 12 months.
Bottom Line
The short-term outlook for Tesla has turned more favorable after the company produced more cars than expected in the second quarter. That shows that it has managed to solve supply chain problems that hurt other traditional automakers. But that impressive performance may not be enough to push the stock much higher than its current level, as concerns about speeding up competition mount.
