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Mon 26 Jul 21: Tesla's 2Q Earnings due After-Mkt

Equities 2 minutes to read
Strats-Kay-88x88
Kay Van-Petersen

Global Macro Strategist

Summary:  Erns Watch aims to highlight some of the key names that are in heavy rotation on investors' & traders' radars.

(These are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations. By the time you synthesize this, things may have changed.)

Mon 26 Jul 21: Tesla's 2Q Earnings due After-Mkt 

 

Overview

Tesla: $643.38 Price, Mkt Cap $620B, -10% YTD, P/E 100x, 2Q $0.974 EPS, Rev $11.4B

  • With the stock down close to 10% YTD & down -30% from its ATH of $900, its likely worth bearing in mind that Tesla finished 2020 up +743% (from $83 to $705) & joined the S&P 500 index. 

    TSLA YTD chart 2021

  • Whether you are an absolute fanatic about the company & its esoteric founder... love it or hate it, Tesla's earnings are always a key event during the reporting season. Think the 100M sprinting event in the Olympics. 

  • To add to this mix, similar to MicroStrategy [MSTR], the market will be looking to see how Tesla's accounts for its Bitcoin purchase - which interestingly enough is correlating to the Mon Asia session seeing Bitcoin $ 38,355 flying by +11% & now being up c. +21% over the last 5 trading days.  

  • Tesla did recognize a small gain in Bitcoin in its first quarter results, yet for the 2Q BTC is down over -41% to a quarterly close of around $34,585. 

  • As always, contribution from carbon credits will also be scrutinized. 

  • The name continues to trade expensively at 100x fwd P/E, or c. 68x Price to Cash Flow. 

  • 2Q EPS est are $0.974 c. +123% QoQ, with Revenue QoQ growth of +88% to $11.4B.

  • Operating profit is expected to make a new high with a QoQ +150% growth to $817M.

  • From a production standpoint (post delivering +200K cars for the first time in 2Q21) investors will be looking for updates on Tesla's plants in Germany & Texas (when do they come on-line), as well as an update on Tesla's strategy in China - in particular given the continued souring of US / CH relations. As well as chip shortage that seems to be impacting everyone in the auto space. 

  • Full year expectations for 2021 are c. 865K cars according to Barrons. Given that c. 290K cars were produced in 1H21, the skew for the heavy lift is very much a 2H21 affair. Given renewed Delta variant concerns & pockets of restrictions globally, this could go either way. 

  • Analysts have 43% buys in the name, vs. 23% sells with an avg. 12M price target of $624, c. -3% from Fri's close of $643.38. The analyst price range forecasts is wide, ranging from $1,200 (+87%) to $550 (-15%).
  -

Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.

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KVP

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