Tesla Stock Falls As Earnings Beat; Bitcoin Sale, Regulatory Credits Boost Profit


Tesla (TSLA) topped first-quarter earnings estimates late Monday with a huge gain after more than doubling deliveries for the period. Tesla stock fell late.




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The results come as the auto industry has been hobbled by production slowdowns due to a global chip shortage, forcing companies like General Motors (GM), Ford (F), Volkswagen (VWAGY) and Nio (NIO) to slow production. Ford also reports on Wednesday, with Nio due on Thursday.

But Tesla said Monday it was “able to navigate through global chip supply shortage issues in part by pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.”

Tesla Earnings

Estimates: Analysts polled by Zacks Investment Research expect EPS of 79 cents, a 216% year-over-year surge. Sales are seen jumping 66% to $9.92 billion. 

Results: EPS of 93 cents on revenue of $10.39 billion. Revenue from regulatory credits jumped 46% to $518 million. A Bitcoin sale, margin improvement and cost reductions also improved profits. Tesla bought $1.5 billion in Bitcoin in February and began accepting the cryptocurrency as payment for EVs.

Average sales price fell 13% on lower Model S and Model X deliveries due to product updates and as lower-priced China-made vehicles became a larger percentage of the mix. Tesla delivered 184,800 vehicles in Q1, up 109% and beating estimates for 168,000.

In California, Model Y production continued to ramp and is approaching
full capacity. In Texas, the factory remains on track to start production and deliveries late this year. In China, the Shanghai factory continues to increase production and recently reached a domestic supply sourcing ratio of over 90%. The Gigafactory Berlin is still on track for production and deliveries in late 2021.

Outlook: Tesla reaffirmed its delivery forecast from January, when it predicted 50% average annual growth in vehicle deliveries, with 2021 expected to be faster than that pace. In 2020, deliveries grew 36% to 499,647.

Tesla added that Semi deliveries will begin in 2021 but didn’t mention Cybertruck.


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Tesla Stock

Stock: Shares fell 2.5% late after closing up 1.2% at 738.20 on the stock market today. Tesla stock has a cup-with-handle base with a 780.89 buy point, according to MarketSmith chart analysis.

Tesla stock has been volatile lately, falling as much as 40% to a low of 539.49 intraday on March 5 from an all time high of 900.40 intraday on Jan. 25. It has since reversed and regained more than 25% of its loss.

While Tesla stock is above its 50-day line, the 50-day is still declining. Also, the midpoint of the handle is only slightly above the midpoint of the relatively deep base.

Tesla’s relative strength line is trending higher again after falling earlier this year, but it’s not far from consolidation lows. Its RS Rating is 95, while its EPS Rating is 73.


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Tesla Faces New Risks

Tesla, which according to a recent German media report may have to delay opening its plant there until October, is facing headwinds elsewhere too.

A video of a Tesla protester in China, during an auto show blaming faulty brakes for an accident, went viral. Tesla has responded by saying the crash was due to speeding. Chinese state media called the response arrogant. Government officials have been ratcheting up pressure on Tesla to be more responsive to complaints.

Morgan Stanley analyst Adam Jonas said in a note to clients Friday that the company faces “anti-Tesla sentiment in China.” He says China realistically accounts for the majority of Tesla profits today.

“However, we have allowed over the next decade for Tesla’s position in the domestic Chinese market will be substantially diluted over time through competition and policies to encourage local players,” Jonas wrote.

Jonas forecasts that by 2030, Tesla will sell 743,000 units a year in China, accounting for less than 7% of its BEV market. For 2021, the analyst projects Tesla’s share of the China BEV market to be about 15%.

However, given recent delivery numbers, Jonas raised his price target for Tesla stock to 900 from 880. He also raised his forecast for fiscal 2021 deliveries by 3% to 809,000 units. But he adds that his forecast is slightly below consensus because he’s “allowing for potential supply constraints.”

Meanwhile, Tesla has also been plagued with safety concerns. A crash in Texas on April 17 in which two people died appeared to have no one in the driver seat. Police have issued a warrant to Tesla to retrieve data from the 2019 Model S that slammed into a tree and burst into flames. Federal investigators are also probing the accident.

On Monday, Tesla continued to maintain that a camera-only system is needed, “to the point where radar is becoming unnecessary earlier than expected.”

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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