Tesla’s 1Q18 earnings call
Tesla (TSLA) has been in the news for negative reasons since its 1Q18 earnings release on May 2. Despite the fact that the company managed to beat analysts’ expectations in 1Q18, investors reacted negatively to its first-quarter report.
Most of this negative publicity for Tesla has been fueled by CEO Elon Musk’s unexpected behavior on the company’s earnings call, which some felt was rude. During the call, Musk ignored two analysts’ questions by saying, “Boring bonehead questions are not cool. Next,” and, “Sorry. These questions are so dry. They’re killing me.”
Is Elon Musk’s anger justified?
Despite recent production issues, it’s noteworthy that the Model 3’s production and deliveries growth have been much faster than those of Tesla’s other vehicles. In the second and third quarters of its initial deliveries, the Model 3’s deliveries rose 595% and 431%, respectively, quarter-over-quarter.
In the chart above, we’ve compared the quarterly deliveries growth rates of the Model S, Model 3, and Model X at their initial stages. If we conservatively consider the Model 3’s average production rate to be ~2,000 units per week for 2Q18, Tesla could report handsome three-digit growth of nearly 200% quarter-over-quarter in its Model 3 deliveries.
Consistently achieving such phenomenal production growth in a capital-intensive industry such as automotive isn’t easy, especially in the case of a new entrant like Tesla. At the moment, the market seems to be ignoring this rapid growth in Tesla’s deliveries, as its stock is still trading in negative territory—down 1.4% year-to-date as of May 9.
At a time when Musk’s efforts to lead Tesla toward significant Model 3 production growth might be deserving of a little appreciation, he’s been facing criticism for missing his own highly ambitious car production targets. This could be one of the reasons for Musk’s anger toward Tesla bears and skeptic analysts.
Interestingly, Musk bought 33,000 shares of Tesla in the open market between the price range of $295.03 and $302.13 on May 7. This move could be an indication of his willingness to bet against the Tesla bears and state his firm belief in Tesla’s bright future.
Note that TSLA’s vehicle line-up is much smaller than those of other mainstream automakers (FXD) such as General Motors (GM), Ford Motor Company (F), and Fiat Chrysler Automobiles (FCAU). Currently, Tesla delivers only three vehicles—the Model S, Model X, and Model 3—to its customers.