Tesla is the world's most secretive automaker, so investors are always eager to read the company's quarterly report and conference call, when they can finally obtain more than little nuggets of information. They have been disappointed by the last two quarterly outcomes. Shares have dropped over 30% from their all-time high set just before the company's fourth-quarter report in late January, with more than a third of the drop occurring since the company's first-quarter reports in April.
So, whether the best-performing company of 2020 can regain its footing will be determined in large part by what investors hear this evening when Tesla delivers its second-quarter earnings.
What’s happening in China?
Tesla, unlike other manufacturers, usually only announces global sales and does not break them down by country or market. However, if it wants to reassure investors, it may need to provide information on its sales in China, which is not only the largest market for total auto sales but also the largest market for EV sales.
In China, Tesla has been rocked by extensive claims of safety issues, including a recall of almost all cars produced at its Shanghai factory and a protest by Tesla owners at the Shanghai auto show in April.
For the second quarter in a row, Tesla is expected to report adjusted profits of more than $1 billion and net income of around $650 million. Both would be corporate records, and it would be the company's eighth consecutive quarterly profit after years of deficits.
Tesla's detractors point out, however, that its net income has never exceeded the money it earns from selling regulatory tax credits to other automakers whose EV sales make up a small portion of their overall sales. These other manufacturers use the credits they buy from Tesla to comply with environmental regulations, avoiding significant fines.
Bouncing with Bitcoin?
Tesla said in February that it purchased $1.5 billion in bitcoin with some of its cash on hand. It announced in April that it had sold part of its holdings and earned $101 million from cryptocurrency trading, bolstering the notion that the corporation doesn't generate money selling automobiles.
Some investors were concerned about the bitcoin transactions, especially because the cryptocurrency has lost more than a third of its value since then.
Supply chain update
A computer chip shortfall is affecting the whole global vehicle sector. Tesla now faces more competition for the raw materials that go into massive EV batteries, such as lithium, as other automakers speed up manufacturing of their own EVs.
Tesla has to boost the price of its cars due to rising raw material costs, Musk tweeted in May. Investors' forecasts for Tesla sales for the rest of the year will be influenced by the prognosis for raw material prices and the supply of parts such as semiconductors and batteries.
Giga factories in Texas and Germany
Tesla has a track record of bringing new factories online considerably more quickly than traditional manufacturers. It is building a plant near Austin, Texas, that will produce the Model Y SUV and, eventually, the Cybertruck pickup truck, as well as another near Berlin to serve the European market, where it is losing ground to Volkswagen in EV sales.
Tesla's most ambitious expansion to date is having two plants under construction at the same time, and the timing of the plants' completion will be a crucial factor in future investor expectations.
Speaking of the Cybertruck…
With established manufacturers like Ford and General Motors on the edge of delivering their own electric pickups, Tesla needs to get the Cybertruck, its first pickup, into the hands of customers as quickly as possible. Following a few tweets on Musk’s expectations of how the market will respond to its new all-electric truck, investors will be keen to get an update from the Technoking.