Tesla Motors Inc TSLA initially surged more than 4.0 percent in Wednesday's after-hours session following a Q1 earnings report mostly in line with Wall Street expectations. However, the stock has plummeted more than 5 percent in Thursday’s session after the market had a bit more time to digest what it saw from Tesla.
The big initial driver of market excitement following Tesla’s report was the company’s guidance that it plans to ship 500,000 vehicles per year by 2018, two years ahead of its previous 2020 estimate.
The company also demonstrated extremely strong 45 percent year-over-year sales growth.
So why the selloff? After the widely-publicized success of the Model 3 launch earlier this quarter, earnings may be the last major catalyst for Tesla for a while, and traders could simply be taking the opportunity to lock in huge gains in recent months. Even after Thursday’s drop, Tesla is still up 32.0 percent in the past three months.
Outside of profit-taking, the market may be concerned about Tesla’s ambitious guidance.
Tesla still anticipates shipping 80,000 to 90,000 vehicles in 2016, despite the fact that it missed its Q1 shipping guidance, shipping 14,820 vehicles in Q1, over 1,000 vehicles short its 16,000-vehicle projection.
In addition, news broke late Wednesday that two Tesla production chiefs are leaving the company. At a time when the company is supposedly kicking into top gear on production ramp-ups, the market may see the departure of two top production executives as a red flag.
General Motors Company GM is set to begin shipping its answer to the Model 3, the Bolt EV, later this year.
Disclosure: The author holds no position in the stocks mentioned.
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