So whether the best performing stock of 2020 can get back on track will depend greatly on what investors hear Monday evening, when Tesla releases its second quarter results.
Unlike other automakers, Tesla normally reports only global numbers, and doesn’t break down sales by country or market. But if it wants to assure investors, it may need to give details on its sales in China, which is not only the largest market for all auto sales but also the major market with the greatest share of sales going to EVs.
“The China growth stories is the top of the list for Tesla,” said Dan Ives, tech analyst with Wedbush Securities and a Tesla bull. “This is their key market, we believe 40% of their sales will come from there next year. I think that’s the linchpin to the stock going up or down.”
Although Chinese sales of EVs from other automakers are reportedly growing, Tesla’s China sales fell 9.2%, according to stats cited by Gordon Johnson of GLJ Research, an analyst who is one of Tesla’s harshest critics.
How did it make its profits?
Analysts surveyed by Refinitiv expect Tesla to report adjusted income of more than $1 billion for the second straight quarter, and net income of about $650 million. Both would be records for the company, and would mark the eighth straight quarterly profit after years of losses.
Tesla got $518 million from those sales in the first quarter, but even Tesla admits it can’t count on those sales to continue as other automakers start to sell more of their own EVs. The company’s critics say it is proof that Tesla can’t make money just from selling cars.
If its net income finally does exceed those credits, as the estimates suggest, it will be a significant milestone for the company, Ives said.
“That would throw one of the core bear arguments against the stock out the window,” he said.
What’s going on with its bitcoin holdings?
What’s going on with supply chain issues?
With other automakers ramping up production of their own EVs, Tesla now has greater competition for the raw materials that make up large EVe batteries, such as lithium.
What’s going on with new plants in Texas and Germany?
Tesla has a track record of getting new plants up and running much faster than traditional automakers.
Having two plants under construction simultaneously is the most ambitious expansion ever for Tesla, and the outlook for when the plants will be up to speed will be a key to investor expectations going forward.
Tesla said in April it expected both plants to have limited production later this year and “volume production” in 2022. It did not spell out what that means.
What’s the latest on the Cybertruck?
What are plans to open Tesla’s superchargers to other automakers’ EVs.
This past week, Musk said in a tweet that “we’re making our Supercharger network open to other EVs later this year.” As is often the case when he makes news via tweet, there were no details to help investors assess the business impact of such a move.
It could be significant. “By 2030, we conservatively estimate Tesla supercharging revenue of $2.9 billion, a figure which does not include any revenue from non-Tesla vehicles,” wrote Morgan Stanley auto analyst Adam Jonas in a note following the tweet.
Musk will almost certainly be asked about the plans to open the network to other companies’ cars during the conference call.
What’s the outlook for full self-driving cars?
This is one reason Tesla shares have so greatly outperformed traditional auto stocks: the belief of investors that it is closer to offering full self-driving cars, or FSD, than any other companies.
But so far FSD has been more promise than reality. Investors will be eager to hear the latest outlook, and for the revenue that Tesla hopes to gain from it.