Tesla, Inc.’s TSLA first-quarter earnings call triggered a 13% surge in after-hours trading, but analysts remain divided on the company’s near-term prospects.
Elon Delivers (Mostly): Future Fund‘s Gary Black said CEO Elon Musk delivered one of his best conference calls, despite the slight earnings miss. Incidentally, ahead of the earnings, the fund manager said he regretted not selling his firm’s entire Tesla holding after trimming it from 12.2% in September 2022 to 2.7%.
“We were pleased that TSLA confirmed that not only was the more affordable next-gen vehicle not canceled, [but] TSLA appears to have accelerated the start of production (previously 2025 year-end) to ‘early 2025,'” he said.
Black found other positives, including a higher-than-expected gross margin and reassurances about 2024 volumes exceeding 2023. He did acknowledge the inclusion of unspecified one-time revenue recognition for FSD.
See Also: Everything You Need To Know About Tesla Stock
Robo-Taxi Rivalry: Deepwater Asset Management‘s Gene Munster believes Tesla, Uber, and Lyft are on a collision course, based on Tesla’s shareholder letter mentioning “hardware and software ecosystems necessary to achieve vehicle autonomy and a ride-hailing service.”
Munster suggests Tesla will own some vehicles in the potential ride-hailing fleet, while others will belong to users or third parties. He envisions a fleet potentially numbering in the tens of millions.
Despite Tesla’s recent production milestone of 1,000 Cybertrucks per week, Munster remains cautious about 2024 Cybertruck production, aligning with analyst expectations of around 50,000 units. He also attributes the 1% increase in average selling price to the Cybertruck and higher-end Model Y trims.
Munster remains skeptical of Musk’s prediction of “a lot better” second-quarter sales. “While I hope he’s right, it’s hard to believe, given rates remain high and the pull forward of EV demand in 2022 and [the] first half of 2023 should create an air pocket this year,” he said.
Utter Disaster … Wait, What? Tesla bear Gordon Johnson of GLJ Research took a sharply negative view.
“In short, this is an utter disaster (both the result/cash-burn, and the guide/abandonment of the next-gen platform); stated differently, for the TSLA bears, Christmas just ‘came early,'” he said.
He sees Tesla abandoning the low-cost, next-gen platform and resorting to “de-contenting” existing models. He considers this a “huge letdown.”
Johnson further criticized Tesla’s record cash burn in the first quarter, with a negative free cash flow of $2.53 billion, far below estimates and marking the company’s worst quarter ever in this metric. He also highlights a drop in operating margin from 8.2% to 5.5%, missing analyst expectations and significantly lower than the global auto industry average.
“This is a catastrophe, as this puts TSLA's op. margins in line/worse than the global auto industry,” he said.
Johnson also said Tesla’s revised 2024 growth target is “notably lower” than the previously announced 50% growth projection.
Pre-market Optimism: Tesla shares rose 10.11% pre-market to $159.30, according to Benzinga Pro data.
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