Electric vehicle manager Tesla Inc. TSLA announced its second-quarter financial results after the market closed on Wednesday. Five analysts broke down quarterly results, what a big sell-off from Bitcoin BTC/USD could mean and what awaits Tesla.
Tesla analysts: Morgan Stanley analyst Adam Jonas had an overweight rating and a price target of $1,150.
RBC Capital Markets analyst Joseph Spak had an outperform rating and a price target of $1,100.
Wells Fargo analyst Colin Langan had an Equal Weight rating and lowered the price target from $830 to $820.
Needham analyst Rajvindra Gill had an underperform rating and no price target.
Wedbush analyst Daniel Ives had an outperform rating and a price target of $1,000.
The analyst’s takeaways: Morgan Stanley’s Jonas said the second-quarter earnings report was stronger than expected and said Tesla remained in pole position.
“Hard to see what really rocks the boat on the Tesla consensus until the company shows a bigger margin gap,” Jonas said.
The analyst points out that the most important factors for the evolution of the stock are the reopening of factories in China, the ramp-up of gigafactories in Austin and Berlin and margins.
Spak of RBC Capital Market said Tesla’s second quarter report could be the company coming out of its “difficult quarter”.
“We don’t see much to change anyone’s perspective, but we continue to like the name and see the potential for upside margins from the China recovery and the Austin/Berlin ramp, which could both be near-term catalysts for the stock,” Spak said.
The second quarter saw continued strong demand for Tesla vehicles, according to Wells Fargo’s Langan, who cited long delivery times for orders reported by the company.
“So even if there is a bit of weakness, Tesla has a lot to do and the economy/sentiment could be different in a few quarters,” Langan said.
The analyst said the company’s production is its limiting factor.
“Elon has indicated that a rate of 40,000/week is possible by the end of the year, so even if there are no further improvements, this supports consensus expectations of around 2 million deliveries next year.”
The second quarter was the first quarter-over-quarter decline in gross profit since the first quarter of 2020 according to Needham’s Gill. Higher production could help improve margins in the future.
“Recent sales at higher prices should continue to materialize at 2H 22 and 23,” Gill said.
The analyst saw competition coming, which could be a key element over the next few quarters in discussions of the market share of electric vehicles.
Ives called the second quarter better than many feared.
“Customer demand is holding up despite the macro because Tesla doesn’t have a demand problem according to the conference call, which is consistent with our thesis,” Wedbush’s Ives said.
Factory closures in China in April and May likely impacted a loss of 70,000 shipments according to an analyst estimate.
Ives said many were skeptical of the second-half forecast.
“The elephant in the room for stock will be the Everest-like uphill climb for the necessary 2H deliveries.”
Related Link: Did Tesla Make Money From Its $1.5 Billion Bitcoin Purchase?
Bitcoin selloff analysts: One of the main storylines in Tesla’s second quarter report was the announcement that 75% of its Bitcoin BTC/USD the stake had been converted into fiat.
Langan said the move was made due to concerns about COVID-19 lockdowns and to maximize cash.
“We think most investors would prefer TSLA to rid their balance sheets of crypto, but Elon mentioned that they are open to Bitcoin rising in the future,” Langan said.
Ives pointed out that the sale of Bitcoin was positive for Tesla and investors.
“Tesla sold about 75% of its position, which ripped the bandage off from this brutal chapter that has resulted in a big loss since the start of the Bitcoin journey and occasionally caused the stock to reverse,” Ives said.
Ives called the Bitcoin buying a “brutal sideshow chapter” that resulted in massive losses.
TSLA Price Action: Tesla closed Thursday up 9.78% at $815.12.
Photo: Courtesy of Tesla Inc.