The volatility in Tesla (TSLA) shares can sometimes be both nerve-wracking and exhilarating, depending on what side of the fence you’re on...or the lane you’re driving in. The stock has fallen as much as 40% since reaching a 52-week high of $900 to a low of $539 on March 5. However, since that low, the stock has risen as much as 46%.
That rate of volatility is par for the course for Tesla shares. And while the stock added 4% over the past thirty days, it still has tons of ground to make up, given that it is down 8% year to date, compared to the 16% rise in the S&P 500 index. As to which direction the stock will go next? We will get that answer when the luxury electric car manufacturer reports second quarter fiscal 2021 earnings results after the closing bell Monday.
The year-to-date underperformance in Tesla stock is even more notable when compared to the performance in Ford (F) and General Motors (GM) which have gained 58% and 33% year to date, respectively. The stock hasn’t moved even as the company delivered 201,250 vehicles in Q2, which rose from the 90,650 deliveries in year ago quarter and the 184,800 vehicles delivered in the first quarter. The better-than-expected sequential increase in deliveries was aided by strong sales of the Model 3 and Model Y, which offset weakness in Model S and Model X.
Meanwhile, Tesla has reportedly gone on a hiring spree in anticipation of higher demand. This increase in hiring has sparked optimism that the company is likely to boost its full-year delivery guidance. After deliveries reached 500,000 vehicles in 2020, Tesla is expected to grow vehicle deliveries between 50% to 70% in 2021. Investors are also expecting meaningful signs of improvement, particularly with regards to Q2 profit margins.
In the three months that ended June, Wall Street expects Tesla to earn 96 cents per share on revenue of $11.21 billion. This compares to the year-ago quarter when earnings came to 44 cents per share on revenue of $6.04 billion. For the full year, ending in December, earnings are expected to rise 100% year over year $4.48 per share, while full-year revenue of $48.75 billion would rise 54.60% year over year.
Tesla’s increased focus on its growth strategy, namely production and profit margins, have been a key factor in the company’s recent success and the expected 100% rise in full-year profits. The company has achieved a production capacity run rate of more than 90% compared to each of the prior four quarters. In the first quarter, Tesla reported total revenues of $10.39 billion surged 73.5% year over year, beating estimate by $110 million, while adjusted EPS of 93 cents beat by 15 cents.
This was the company’s seventh straight quarter of profitability. Adjusted EBITDA was 17.7% of revenue, versus the 16.9% expected. Just as impressive, automotive gross margin came in at 26.5%, ahead of the 24.3% expected. On Monday, Tesla will need to keep its foot on the production/delivery gas pedals as it relates to Q3 guidance. Investors will also listen for progress on production timelines for the Semi and the Cybertruck, as well as building progress for Texas plant and the one being built in Germany which determine whether Tesla stock drives higher or continue in reverse.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Richard Saintvilus
After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.
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