Tesla Earnings Post-Mortem: Blowout Or Blow Up?

It’s one of the most divisive stocks on the market today. Without a doubt, Tesla (TSLA) is a real conversation starter – and in the wake of a controversial first-quarter earnings report, those conversations can quickly devolve into heated debates.

Tesla is, of course, one of the most famous companies that focuses exclusively on electric vehicles (EVs).

Sure, there are older American companies like Ford (F) and General Motors (GM) that are dipping their feet into the EV space. Yet, it’s Tesla that seems to garner the lion’s share of the attention.

Perhaps, in part, that’s due to founder Elon Musk’s flair for the dramatic. That said, in the wake of an earnings release featuring some encouraging numbers, Musk was surprisingly dour.

Is it possible that the seemingly outstanding quarter wasn’t the grand slam that some proponents think it was?

A Quick Look At TSLA Stock

Before we drill down to the fiscal data, it’s worthwhile to examine the recent price action for TSLA stock. After all, this will help us to gauge the market’s reaction to the earnings release.

The markets got wind of Tesla’s quarterly financial report after the close of the markets on Monday, April 26. By 1:30 p.m. Eastern U.S. Time the next day, shares were down nearly 4%, to around $710.

Tesla can’t blame the overall stock market for this, as the major indexes were nearly flat.

This isn’t to suggest that long-term shareholders got it “wrong,” by any means. They’ve done quite well for themselves, of course, though it’s interesting that TSLA stock has gone basically nowhere since the beginning of 2021.

Also noteworthy is TSLA’s eye-popping trailing 12-month price-to-earnings ratio of 1,101.16. For value-oriented investors, a P/E ratio with four non-decimal digits is hard to swallow.

Yet, Tesla’s legions of fans would likely contend that there’s value to be found in TSLA stock. So, let’s delve into the quarterly results to see how this EV market disruptor fared in early 2021.

Let The Chips Fall Where They May

Surely, some investors were concerned that an industry-wide chip shortage would put a damper on Tesla’s first-quarter financial performance.

In reality, though, the chip shortage didn’t seem to have much of an impact.

For the first quarter, Tesla posted earnings of 93 cents per share. That’s a definite beat compared to the 79 cents per share Wall Street had expected.

In terms of revenues, Tesla reported $10.39 billion for the quarter, slightly ahead of the Street’s $10.29 billion call. Compared to the year-ago quarter, however, it represents an impressive 74% improvement.

As for GAAP net profits, Tesla recorded $438 million, signifying a quarterly record. On top of all that, the company delivered 184,800 Model 3 and Model Y cars, thereby setting another record for Tesla.

Here’s Where It Gets Interesting

Even the staunchest skeptics would be hard-pressed to argue with those numbers. Clearly, Tesla is a growing business and the 1Q numbers prove this.

That being said, there’s something about Tesla’s first quarter which might not impress everyone.

Notably, the automaker observed a $101 million positive impact from bitcoin (BTC) sales during the first quarter. Bitcoin happened to skyrocket in value during that time, and that event isn’t necessarily something that will occur again in future quarters.

Furthermore, in a candid but perhaps unsettling moment during the earnings call, Musk declared that media reports of a recent fatal accident were “extremely deceptive.”

Investors will definitely want to keep tabs on this development, in hopes that Musk will offer more clarification on whatever he might have meant by this.

In any case, it’s not difficult to find investors who aren’t in the Tesla bull camp. One notable example is GLJ Research Founder Gordon Johnson, who countered that Tesla “is burning money.”

“This is not a viable business model and they are losing share in Europe in China. Their sales in the US were down… This is a bad print across the board,” Johnson contended.

Wall Street Weighs In

In the last three months, 12 Buys, 6 Holds and 8 Sells have been assigned, making the consensus rating for TSLA a Hold. Based on the $646.67 average analyst price target, the downside potential lands at 8%. (See Tesla stock analysis on TipRanks)

Takeaway

Some love Tesla, while others hate it. It almost feels like there’s no in between with this company.

Yet, it’s perfectly okay to appreciate both sides of the argument. There’s no point in trying to deny that Tesla is a fast-growing company – or that it’s imperfect in some respects.

Either way, you’ll undoubtedly be hearing more from Musk and Tesla in 2021.

Disclosure: On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.