Tomorrow is the judgment day guys. Will Tesla smash Q2 earnings and take investors into the amazing world of the S&P 500? or will it pull the break on the insane rally that started late 2019?.
Tesla is currently up almost 3% pre-market, trading around $1690.
Electric vehicle giant Tesla Inc! is set to report second-quarter earnings tomorrow after market closes. This guys, is like American Super Bowl 2020 as every analyst on earth will be watching super close.
90% of Analysts have been playing catch-up as the stock has blown past their price targets on the heels of better than expected vehicle deliveries, and speculation of inclusion in the S&P 500 if it reports a profit for its latest quarter.
“Why we’ve been dragging our feet about the price target is really about the earnings power, and that at the end of the day we think is driven by the gross margins,” said Oppenheimer analyst Colin Rusch, who has a ridiculous price target of just $968, while Tesla is currently trading almost double of that target.
The Most Important Thing To Watch Tomorrow
- GUIDANCE: The full-year outlook is to be watched closely. Tesla is yet to update the full-year guidance after smashing Q2 deliveries by delivering 90,650, instead of the 72,000 expected by wall-street analysts. Before the Coronavirus pandemic, Tesla promised investors to deliver about 500,000 vehicles in 2020. Whether the pandemic has affected that guidance to deliver 500,000 vehicles this year or not, is left to be seen tomorrow.
- MODEL-Y: Also, Model Y’s price was reduced by $3000. If that price reduction increased or affected the sales of the vehicle that Tesla expects to take them to the next level or not is left to be seen tomorrow.
- CHINA: Chinese EV demand has been insane. China is not the frontline in the EV war against ICE cars. Analysts expect Tesla to deliver about 150,000 vehicles in China this year. The Coronavirus pandemic has not affected Tesla negatively in China, even though its factory was closed for some weeks while China was the hot zone earlier this year. Tesla’s Model 3 has outsold other EVs in China and all over the world, and it doesn’t seem to be slowing down. According to China’s Passenger Car Association (CPCA), Tesla sold 14,954 Model 3 vehicles in June, up from 11,095 units in May and 3,635 units in April. Insane numbers right?.
- CASH AT HAND: Free Cash Flow is something analysts will be looking super closely at as well. This shouldn’t be a problem for Tesla, as Tesla is now the king of cars. Tesla is the most valuable vehicle maker in the world and now sits on a market cap of about $304.735B. Some are arguing that Tesla should use this opportunity to raise more money, as Tesla can literally knock on the door of any bank in the world can walk out with a huge pile of cash. Tesla is expanding aggressively and surely free cash flow is very important. There is nothing like too much money. According to CFRA analyst Garrett Nelson, “Tesla shares have gotten ahead of underlying fundamentals and do not appropriately reflect various risks surrounding the story, including the fact TSLA is entering a major spending cycle with the construction of Gigafactories 4 and 5.” factory projects will also “act as a significant drag on free cash flow over the next several quarters,” adding risk to shares, he wrote.
Are you super pumped as we at Frunkla.com are?. Will Tesla beat estimates and take investors to S&P 500?. Kindly share your opinion with us.