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Long/Short Investments in L/S Equity: Valuation and Ideas,

Tesla’s Lukewarm Earnings Enough to Mollify Investors

In terms of positives, Tesla (TSLA) grew its Q2 revenue 33% Y/Y and sales volumes came in at 14,402, below expectations set at 17,000. The company booked positive cash flow from operations, but only due to reservation deposits, cash which must be refunded once vehicles are delivered to its customers. Yet revenue, despite its growth, fell widely short of expectations. A net income loss of $293 million led to a $1.06 per share loss, far worse than median estimates of -$0.51 per share. Sell-side estimates had come in at anywhere from a slight gain per share, to -$1.03, but TSLA’s results fell even further outside this range.

Tesla loses money on each vehicle it produces but benefits from tax-credit (i.e., taxpayer funded) incentives to financially motivate their production.

After-hours, the stock made an 1% gain before settling in at a 0.75% less in the four-hour off-market session. Overall, it was not a great quarter for Tesla, but investors seemed unfazed by the tepid results.