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Why Tesla Motors Reported Mixed Quarterly Results in 1Q16

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May. 10 2016, Updated 3:07 a.m. ET

Price movement of Tesla Motors

Tesla Motors (TSLA) has a market cap of $30.7 billion and fell 4.2% to close at $222.56 per share on May 4, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -11.5%, -12.9%, and -7.3%, respectively, on the same day. This means that TSLA is trading 11.1% below its 20-day moving average, 2.6% below its 50-day moving average, and 1.6% below its 200-day moving average.

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Related ETF and peers

The Vanguard Large-Cap ETF (VV) invests 0.13% of its holdings in Tesla Motors. The ETF tracks a market-cap-weighted index that covers 85% of the market capitalization of the US equity market. The YTD price movement of VV was 1.3% as of May 3, 2016.

The market caps of Tesla Motors’ competitors are as follows:

  • Ford Motor (F): $55.1 billion
  • Honda Motor (HMC): $47.8 billion
  • General Motors (GM): $48.1 billion

Performance of Tesla Motors in fiscal 1Q16

Tesla Motors reported total fiscal 1Q16 revenues of $1.2 billion, a rise of 22.0% compared to total revenues of $939.9 million in fiscal 1Q15. The company’s total cost of revenues as a percentage of total revenues rose 8.3% in fiscal 1Q16 compared to fiscal 1Q15.

Its net income and EPS (earnings per share) fell to -$282.3 million and -$2.13, respectively, in fiscal 1Q16. This compares to -$154.2 million and -$1.22, respectively, in fiscal 1Q15. It reported non-GAAP (generally accepted accounting principles) EPS of -$0.57 in fiscal 1Q16 compared to -$0.36 in fiscal 1Q15.

Tesla’s cash and cash equivalents and inventory rose 20.5% and 1.9%, respectively, in fiscal 1Q16 compared to fiscal 4Q15. Its debt-to-equity ratio rose to 8.4x in fiscal 1Q16 compared to 6.4x in fiscal 4Q15.

Projections

Tesla Motors has made the following projections:

  • In fiscal 2Q16, it expects to produce about 20,000 vehicles and deliver approximately the same number.
  • It expects to deliver ~17,000 vehicles in 2Q16 due to a large number of vehicles in transit for its customers in Europe and Asia at the end of fiscal 1Q16.
  • It’s planning to exit 2Q16 at a steady production rate of 2,000 vehicles per week.
  • The company is confident that it will deliver 80,000–90,000 new Model S and Model X vehicles in 2016.
  • It expects its Model S non-GAAP gross margin to reach 30% and its Model X non-GAAP gross margin to be ~25% by the end of 2016.

Now let’s take a look at Trinseo.

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