Stock Market News – Tesla next in line to release quarterly results; FOMC statement could affect overall sentiment
May 2, 2018 2:26 pm
Electric vehicle-maker Tesla is scheduled to release its earnings report for Q1 2018 after Wednesday’s US market close. The consensus recommendation for the company is “hold”, with the average consensus recommendation for the Auto & Truck Manufacturers peer group being a “buy”.
The California-based company’s first quarter earnings per share (EPS) are anticipated to come in at -$3.58 according to analysts submitting their projections to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) – i.e. the company is forecast to report a loss. Current expectations reflect a worsening from $3.27 in losses per share from four weeks ago. If the corporation’s bottom line matches estimates, this would represent an increase in losses of 169% compared to the same quarter from last year when the firm lost $1.33 per share. Analysts’ EPS forecasts range from -$4.92 to -$2.60. Tesla delivered an earnings beat in two of the four preceding quarters, while it fell short of expectations in the remaining two.
A positive earnings surprise could see the corporation’s stock price atracting buying interest. Immediate resistance to advances is potentially taking place around the 50% Fibonacci retracement level of the February 27 to April 2 downleg at $302.28, with the range around it encapsulating the $300 round figure as well. The current level of the 50-day moving average lies not far above at $308.77 and may act as an additional barrier to the upside in case of stronger bullish movement. Conversely, if financial results disappoint, the share price might come under downside pressure. The area around the 38.2% Fibonacci mark at $288.65 might provide immediate support to declines, with steeper losses potentially targeting the 23.6% Fibonacci level at $271.79; notice that the one-month low recorded on April 26 lies not far above at $276.50. Empirically, the greater the deviation between projected and actual results, the sharper the moves in a given firm’s share price.
In terms of the stock’s short-term momentum as gauged by the RSI, it is looking positive for the most part. The indicator is rising, having just crossed above the 50 neutral-perceived level. Notice though that it is not steeply positively sloped, supporting the case for a cautiously bullish bias overall.
Beyond the earnings numbers, other investor considerations will be high up on the agenda. Namely, investors will be eager to get an update on the firm’s Model 3 production – it appears Tesla is not producing the vehicle that’s directed to the mass market fast enough – as well as on cash issues. The company is a heavy cash-burner and despite stating that it will not require equity or debt financing this year, that’s increasingly challenged by analysts; a signal that financing is indeed needed is likely to exert downside pressure on the stock. Another factor affecting the outlook is how the company’s investment in autonomous driving will turn out. On this front there is also the prospect of increased regulation, especially after the death of an individual whilst driving his Model X and utilizing the company’s Autopilot feature in late March. Tesla’s stock came under intense selling pressure in the aftermath of the incident (this can be seen from the chart above as well).
In recent news involving the company, on Tuesday, startup company Nikola Motor Co filed a lawsuit against Tesla, alleging design patent infringements by the carmaker. The former is suing for more than $2 billion, which roughly amounts to one twenty-fifth of Tesla’s market capitalization. Tesla is denying the allegations, but it will be interesting to see how this story plays out moving forward.
Tesla is a Nasdaq 100 component stock. Year-to-date and ahead of Wednesday’s opening bell on Wall Street, the firm’s stock price is trading lower by 3.7%, underperforming the Nasdaq 100 which is up by 4.5% so far in 2018. Analysts’ mean and median price target on the company are at $316.92 and $326.00 correspondingly, reflecting upside potential relative to where the shares currently trade.
It should also be kept in mind that the overall sentiment during today’s trading could well be driven by the FOMC’s statement accompanying its decision on interest rates. No change in rates is anticipated but should the central bank signal a more aggressive rate normalization cycle than currently discounted by market participants – resulting in a rise in bond yields – then this might come to the detriment of equities (the implication being that fixed income investments will become relatively more attractive compared to equity investments).
Lastly, other companies releasing quarterly results as the week unfolds include Activision Blizzard and Xerox; both corporations will be reporting after Thursday’s US market close.
Electric vehicle-maker Tesla is scheduled to release its earnings report for Q1 2018 after Wednesday’s US market close. The consensus recommendation for the company is “hold”, with the average consensus recommendation for the Auto & Truck Manufacturers peer group being a “buy”.
The California-based company’s first quarter earnings per share (EPS) are anticipated to come in at -$3.58 according to analysts submitting their projections to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) – i.e. the company is forecast to report a loss. Current expectations reflect a worsening from $3.27 in losses per share from four weeks ago. If the corporation’s bottom line matches estimates, this would represent an increase in losses of 169% compared to the same quarter from last year when the firm lost $1.33 per share. Analysts’ EPS forecasts range from -$4.92 to -$2.60. Tesla delivered an earnings beat in two of the four preceding quarters, while it fell short of expectations in the remaining two.
A positive earnings surprise could see the corporation’s stock price atracting buying interest. Immediate resistance to advances is potentially taking place around the 50% Fibonacci retracement level of the February 27 to April 2 downleg at $302.28, with the range around it encapsulating the $300 round figure as well. The current level of the 50-day moving average lies not far above at $308.77 and may act as an additional barrier to the upside in case of stronger bullish movement. Conversely, if financial results disappoint, the share price might come under downside pressure. The area around the 38.2% Fibonacci mark at $288.65 might provide immediate support to declines, with steeper losses potentially targeting the 23.6% Fibonacci level at $271.79; notice that the one-month low recorded on April 26 lies not far above at $276.50. Empirically, the greater the deviation between projected and actual results, the sharper the moves in a given firm’s share price.
In terms of the stock’s short-term momentum as gauged by the RSI, it is looking positive for the most part. The indicator is rising, having just crossed above the 50 neutral-perceived level. Notice though that it is not steeply positively sloped, supporting the case for a cautiously bullish bias overall.
Beyond the earnings numbers, other investor considerations will be high up on the agenda. Namely, investors will be eager to get an update on the firm’s Model 3 production – it appears Tesla is not producing the vehicle that’s directed to the mass market fast enough – as well as on cash issues. The company is a heavy cash-burner and despite stating that it will not require equity or debt financing this year, that’s increasingly challenged by analysts; a signal that financing is indeed needed is likely to exert downside pressure on the stock. Another factor affecting the outlook is how the company’s investment in autonomous driving will turn out. On this front there is also the prospect of increased regulation, especially after the death of an individual whilst driving his Model X and utilizing the company’s Autopilot feature in late March. Tesla’s stock came under intense selling pressure in the aftermath of the incident (this can be seen from the chart above as well).
In recent news involving the company, on Tuesday, startup company Nikola Motor Co filed a lawsuit against Tesla, alleging design patent infringements by the carmaker. The former is suing for more than $2 billion, which roughly amounts to one twenty-fifth of Tesla’s market capitalization. Tesla is denying the allegations, but it will be interesting to see how this story plays out moving forward.
Tesla is a Nasdaq 100 component stock. Year-to-date and ahead of Wednesday’s opening bell on Wall Street, the firm’s stock price is trading lower by 3.7%, underperforming the Nasdaq 100 which is up by 4.5% so far in 2018. Analysts’ mean and median price target on the company are at $316.92 and $326.00 correspondingly, reflecting upside potential relative to where the shares currently trade.
It should also be kept in mind that the overall sentiment during today’s trading could well be driven by the FOMC’s statement accompanying its decision on interest rates. No change in rates is anticipated but should the central bank signal a more aggressive rate normalization cycle than currently discounted by market participants – resulting in a rise in bond yields – then this might come to the detriment of equities (the implication being that fixed income investments will become relatively more attractive compared to equity investments).
Lastly, other companies releasing quarterly results as the week unfolds include Activision Blizzard and Xerox; both corporations will be reporting after Thursday’s US market close.
Related Posts: