Market Direction: BULLISH alert
issued 1/10/2019
Shares of Tesla Inc. fell more than 4% in the extended session Wednesday after the Silicon Valley car maker reported a lower-than-expected fourth-quarter adjusted profit and said its chief financial officer was on his way out.
The stock had wavered between gains and losses after hours as fourth-quarter sales came in above forecasts and the company said it expects its Model 3 production to reach a “sustained rate” of 7,000 vehicles a week by the end of the year.
Tesla TSLA, +3.80% earned $139 million, or 78 cents a share, in the quarter, versus a loss of $4.01 a share in the year-ago quarter. The GAAP number was impacted by a $54 million non-cash charge, Tesla said.
Adjusted for one-time items, Tesla earned $1.93 a diluted share, contrasting with a $3.04 loss a year ago. Revenue rose to $7.23 billion, compared with $3.29 billion a year ago.
Analysts polled by FactSet had expected the company to report adjusted earnings of $2.20 a share on sales of $7.12 billion.
Tesla guided for 2019 deliveries between 360,000 and 400,000 vehicles, which would be 45% to 65% year-on-year increase. Tesla said it expects a full-year profit and free cash flow.
Analysts at UBS said they expect the stock to trade flat in the next session on the mixed results and tepid first-quarter guidance.
After the report, Tesla hosted a conference call with analysts, which MarketWatch live-blogged.
The announcement about CFO Deepak Ahuja’s departure came at the very end of the call.
Ahuja had returned to Tesla in 2017. He will be replaced by Zach Kirkhorn, a vice president of finance. Ahuja will retire in the coming months but will remain an advisor to Tesla, Chief Executive Elon Musk said.
Despite being marred by the adjusted-earnings miss, the results showed other strong fourth-quarter indicators for Tesla, said Bill Selesky, an analyst with Argus Research.
Highlights included falling costs, gross margins approaching the 25% goal, “strong and improving” December Model 3 volume, and the 7,000-vehicles-a-year goal for the Model 3 production rate, Selesky said.
Tesla is making smart moves to rein in costs while enabling faster Model 3 production, said Karl Brauer, an analyst with Kelley Blue Book.
“If Tesla can expand demand with a lower-priced Model 3, particularly in Europe and China over the next 12 months, there’s a realistic path to sustained profitability,” he said.
Tesla had warned of smaller profit in the quarter and announced more layoffs earlier this month, sparking a renewed bout of concerns about demand and margins. The company also ended its referral program, and Musk on Twitter suggested it was hurting margins.
Tesla in October hailed its ‘historic’ quarter, complete with a surprise third-quarter GAAP profit and sales that more than doubled in the year.
This week, the Financial Times reported that Saudi Arabia’s multibillion-dollar sovereign fund had sought to cut exposure to Tesla via a hedging deal.
Tesla shares have lost 11% in the past 12 months, which compares with losses around 5% and 4.1% for the S&P 500 index SPX, +1.55% and the Dow Jones Industrial Average DJIA, +1.77% respectively.
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Tesla disappoints on earnings...
Shares of Tesla Inc. fell more than 4% in the extended session Wednesday after the Silicon Valley car maker reported a lower-than-expected fourth-quarter adjusted profit and said its chief financial officer was on his way out.
The stock had wavered between gains and losses after hours as fourth-quarter sales came in above forecasts and the company said it expects its Model 3 production to reach a “sustained rate” of 7,000 vehicles a week by the end of the year.
Tesla TSLA, +3.80% earned $139 million, or 78 cents a share, in the quarter, versus a loss of $4.01 a share in the year-ago quarter. The GAAP number was impacted by a $54 million non-cash charge, Tesla said.
Adjusted for one-time items, Tesla earned $1.93 a diluted share, contrasting with a $3.04 loss a year ago. Revenue rose to $7.23 billion, compared with $3.29 billion a year ago.
Analysts polled by FactSet had expected the company to report adjusted earnings of $2.20 a share on sales of $7.12 billion.
Tesla guided for 2019 deliveries between 360,000 and 400,000 vehicles, which would be 45% to 65% year-on-year increase. Tesla said it expects a full-year profit and free cash flow.
Analysts at UBS said they expect the stock to trade flat in the next session on the mixed results and tepid first-quarter guidance.
After the report, Tesla hosted a conference call with analysts, which MarketWatch live-blogged.
The announcement about CFO Deepak Ahuja’s departure came at the very end of the call.
Ahuja had returned to Tesla in 2017. He will be replaced by Zach Kirkhorn, a vice president of finance. Ahuja will retire in the coming months but will remain an advisor to Tesla, Chief Executive Elon Musk said.
Despite being marred by the adjusted-earnings miss, the results showed other strong fourth-quarter indicators for Tesla, said Bill Selesky, an analyst with Argus Research.
Highlights included falling costs, gross margins approaching the 25% goal, “strong and improving” December Model 3 volume, and the 7,000-vehicles-a-year goal for the Model 3 production rate, Selesky said.
Tesla is making smart moves to rein in costs while enabling faster Model 3 production, said Karl Brauer, an analyst with Kelley Blue Book.
“If Tesla can expand demand with a lower-priced Model 3, particularly in Europe and China over the next 12 months, there’s a realistic path to sustained profitability,” he said.
Tesla had warned of smaller profit in the quarter and announced more layoffs earlier this month, sparking a renewed bout of concerns about demand and margins. The company also ended its referral program, and Musk on Twitter suggested it was hurting margins.
Tesla in October hailed its ‘historic’ quarter, complete with a surprise third-quarter GAAP profit and sales that more than doubled in the year.
This week, the Financial Times reported that Saudi Arabia’s multibillion-dollar sovereign fund had sought to cut exposure to Tesla via a hedging deal.
Tesla shares have lost 11% in the past 12 months, which compares with losses around 5% and 4.1% for the S&P 500 index SPX, +1.55% and the Dow Jones Industrial Average DJIA, +1.77% respectively.
The all-time highs since our initial
recommendation to go LONG
this market. Here is how the markets have performed:
Stock Market
Direction Recommendation (1/10/2019)
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Dow
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up 1,107.72 points a 4.62% gain
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1/30/19
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Nasdaq
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up 215.24 points a 3.08% gain
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1/30/19
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S&P 500
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up 93.80 points a 3.61% gain
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1/30/19
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Related Link: http://www.stockmarket-direction.com/
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