Tesla, Solar City Earnings Preview: Can the Ride Go On?

Cars and Drivers

Published: August 7, 2013 11:10 am

Last Updated: April 28, 2020 5:53 am

After markets close today, two Elon Musk companies, Tesla Motors Inc. (NASDAQ: TSLA) and SolarCity Corp. (NASDAQ: SCTY) are scheduled to report earnings. Both companies have seen impressive stock price appreciation since the end of the first quarter, but there could be some headwinds in the forecast.

Since April 1, shares of Tesla are up more than 220%, while SolarCity’s shares are up a more modest 127%. SolarCity’s shares lost about $1.50 yesterday and are down another $3 a share this morning. The weak report and forecast from First Solar Inc. (NASDAQ: FSLR) is certainly the primary reason for today’s drop, but another is that the halo effect of being an Elon Musk company is simply not as bright for SolarCity as it is for Tesla.

As for Tesla, its shares are down more than $8.50 so far today, after falling by more than $2 yesterday. The company’s shares skyrocketed after it announced a surprise profit last quarter and raised its guidance for new car deliveries by 1,000 for the full year. Investors have expected more of the same this quarter, but there is some concern now that California is said to be considering the elimination of its zero-emissions credits, which Tesla used in the first quarter to pump up its profit.

Tesla booked $67.9 million in zero-emissions credits in the first quarter, and without it the company would not have posted an $11.2 million profit. Tesla’s operating loss in the first quarter totaled $73.8 million.

Shares of Tesla may also be overbought. About 24% of the company’s shares are held by short sellers, and those shorts will spring into action after the company reports earnings tonight. That is no place for the faint of heart.

Analysts have consensus estimates for Tesla to post a net loss of $0.17 per share on revenues of $383.4 million. The consensus estimates for SolarCity call for a net loss of $0.38 a share on $27.44 million in revenues.

In late morning trading, Tesla is down about 6% at $133.55 in a 52-week range of $26.86 to $145.73. Shares of SolarCity are down about 6.5% at $41.00 in a 52-week range of $9.20 to $52.77.

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