Why Tesla Crashed Despite Beating Street Expectations

Tesla Motors Inc TSLA has rebounded slightly after falling more than 6 percent in after hours trading. The automaker reported a Q2 EPS of ($0.48) versus the Street estimate of ($0.58) and sales of $1.2 billion versus $1.17 billion. Tesla also announced that it expected to deliver 50,000 to 55,000 automobiles in 2015 -- down from the firm estimate of 55,000 units that was previously expected. Shares of Tesla are down less than 5 percent as of 5:24 p.m. EST. The stock had previously rebounded more notably and was down 2 percent. "The only negative would probably be the fact that they lowered the delivery view to 50,000 to 55,000 vehicles," Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga. "It seems like the initial trade that hit the stock hard was sort of that commentary on the lowered delivery view. If the view was 55,000 to 60,000 before, that's a bigger deal. If the view was 55,000, that's not a big deal." Udall then highlighted a paragraph from Tesla's shareholder letter: "We are on track to start production of Tesla Energy products this quarter at our Fremont factory, with a plan to ramp up production in Q4. As a result, we expect Q3 services and other revenue to grow modestly and gross margin to be comparable to Q2. We expect to further expand Tesla Energy battery module and pack production at the Gigafactory in Q1 2016 on a more automated line, where construction remains on plan." Udall said that statement, in conjunction with the positive commentary about Asia, "is probably why Tesla is bouncing nicely off the after hours lows."

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Hitting The Highs

Kyle Woodley, managing editor at InvestorPlace, said he thought it was "pretty obvious" that the investor reaction was due to the delivery guidance. "That's got to be the spooky detail for everyone," Woodley told Benzinga. "Revenues beat, earnings beat. The China numbers weren't particularly good either. That probably had something to do with it. There's not much Tesla can do about China's situation." Woodley said that Tesla would have to hit the high end of its estimate range just to come close to delivering 55,000 units. "They basically have to have perfect quarters from here," he said. Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.