Tesla earnings - a very unTesla set of numbers

With an 8% implied move (derived from options prices) and a pedigree for movement in past quarterly earnings reports, it’s not hard to see why – for those who want to capture the instant move, trading in the post-market can be appealing and this is where we can offer an edge.

To others, holding positions over news can work against their strategy and pose a key risk, so will reduce, or exit exposures in the lead up to the event. However, in this instance the numbers and guidance seen from Tesla were, well, very unTesla and there were few shocks.

The initial reaction then was to sell with price trading down over 2% in post-market trade to a low of $715 - perhaps just a few weak longs hoping for more definitive guidance taking some off the table - buyers have picked up the pace as we head through the conference call.

(Source: Tradingview)

Q1 EPS was again hotter than forecast, but when we’re assessing its operating profits it all came from regulatory credits of $518m and the sale of $272m of Bitcoin (from the initial purchase of $1.5b Bitcoin in Q1) turning a profit of $101m. Operating expenses were notably higher.

Revenue was inline, gross margins at 22% were better than consensus (21.4%), with costs falling far faster than price (despite Average Selling Price falling 13%) and free cash flow was far better than the street were eyeing. Deliveries had already been announced for the quarter (Q1), but the full-year guidance ‘to achieve 50% growth’ puts them on a minimum full-year delivery rate of 750,000 vehicles, with the consensus at 830,000 vehicles. Not much to sink your teeth into. We’ve also seen the news that the first deliveries of the Model S rolling out soon and the production rate of Model Y is picking up pace too.

As we had stipulated in the Tesla preview the market was keen to hear an update on new models and this should keep the street happy.

We also heard of two new factories progressing well in Austin and Berlin with first deliveries in ‘late 2021’, which should help keep pace with the evolution in EV, with the order rate as healthy as the company has seen in its history - but again this will not shock the market.

All-in-all a safe, but uninspiring set of numbers in a company driven by sentiment and the concept of the future rather than traditional fundamentals.