Apocalypse Averted for Tesla

Earnings season is just about in the books. The last of Q1’s reports will come in through Friday. I’m sure we’ll have some more surprises before we wrap.

But before we move onto other pastures we have one more company to feature.

Tesla Inc. (NASDAQ: TSLA) stole the spotlight this earnings season after reporting an eye-popping quarterly loss of more than $700 million.

“Wall Street was already bracing for what one analyst called an ‘apocalyptic’ quarter — but the results were still far worse than expected,” CNN reports. “While the company has posted big losses of this size before, analysts surveyed by Refinitiv predicted that Tesla would be about $301 million in the red for the quarter. The actual number was more than double that amount.”

Ouch.

Musk Remains Unfazed

Of course, the always-controversial Elon Musk came out swinging during the conference call, painting a bright future for his electric car company. Demand for every Tesla model is strong, he claims, and untapped international markets should provide future growth.

These rosy predictions don’t change the fact that deliveries are way down this year. And Tesla’s big whiff on revenue and its nasty $702 million loss will give the bears plenty to chew on until the next wave of Tesla gossip hits the wire.

But the most interesting subplot of the latest episode of the Tesla soap opera was the stock’s reaction post-earnings. The stock pinballed between $250–265 immediately following the earnings release and then settled.

The options market was pointing to a move of more than 8% following the earnings announcement, according to CNBC. Tesla shares had other plans, opening lower by about $2. Go figure…

TSLA

Yes, the chart is completely hideous. But a big bounce here wouldn’t surprise me, either.

In fact, flashing forward to today…

Tesla Inc. Fanatics Rejoice!

The controversial electric car stock halted its slide last Thursday after management filed for a $650 million stock offering.

That’s right: Tesla essentially admitted it desperately needs cash and the stock promptly rallied more than 4%.

A rational investor would probably assume a stock would tank after announcing a plan to offer 2.7 million shares of additional common stock, even if Elon Musk is going to fork over $10 million for some of those shares.

Unfortunately, the stock market is not a rational place. Maybe shareholders are interpreting Tesla’s fundraising efforts as a bizarre show of honesty or an admission that the business needs to improve. But aside from polling his Twitter followers about the existence of alternate futures and timelines, Elon Musk hasn’t uttered a peep about the planned offering.

Either way, last week’s rally might turn into nothing but a brief reprieve for Tesla shares.

This is still one ugly chart:

TSLA

I’ll let the fanatics duke this one out while we seek out better opportunities elsewhere…

You should, too. More on your best alternative to Tesla in the electric vehicle (EV) space later this week from Ray.

Stay tuned.

For Technology Profits Daily,

Greg Guenthner
Chief Trading Expert

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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