In recent years, most automakers (XLY), including Ford (F), General Motors (GM), and Fiat Chrysler (FCAU), have benefited from the high North American auto demand. Tesla’s (TSLA) vehicle deliveries have increased, but the company has been able to churn out GAAP- (generally accepted accounting principles) based net profit in only one quarter since the company was listed in 2010.
1Q16 versus 2Q16 expectations
In 1Q16, Tesla reported a non-GAAP net loss of $0.57 per share, which is 58% higher than the 1Q15 net loss per share of $0.36. This was in line with analysts’ consensus estimate of -$0.56 per share. The company’s earnings were negatively affected by multiple factors, including unfavorable product mix and currency movement.
Going forward, analysts are expecting Tesla’s 2Q16 earnings to remain in negative territory with a loss of $0.53 per share on a non-GAAP basis. This expectation of loss is 10% higher than the company’s loss of $0.48 in the corresponding quarter of the previous year.
Will net profitability be delayed?
According to analyst estimates, Tesla isn’t likely to reenter green territory and begin posting net profit until the first quarter of 2017 on a GAAP basis.
It could be a difficult task for the company to turn profitable in the coming quarters. Recently, Tesla advanced its mass vehicle production plan to 2018 from 2020. This plan requires huge investments and could postpone Tesla’s profitability further.
Interestingly, in 1Q13, Tesla posted a GAAP net profit when analysts were expecting the company to lose money in the quarter. It’s important to note that 2013 was a remarkable year for Tesla. That year, the company exceeded its vehicle deliveries and revenue guidance. It also announced its new Gigafactory, which will produce lithium ion batteries to bring down battery costs by more than 30%.
In the next part of this series, we’ll see what analysts are recommending for Tesla stock ahead of its 2Q16 earnings release.