Few companies have made as many headlines as Tesla Motor Company has this year. With the stock price up over 400 percent this year and a price-to-earnings ratio of almost 600-1, it was about time Tesla’s stock price came back down to earth. The cause for the companies recent slide was their less-than-stellar quarterly report. Although Tesla’s earnings of 12 cents a share beat out analysts expectations of nine cents a share, it fell short of growth projections, which is the primary driver of the equity’s price. Tesla sold about 5,500 of its flagship vehicle, the model S, in the most recent quarter. This was slightly below analysts’ expectations of approximately 5,800 vehicles.
Tesla’s fearless leader, CEO Elon Musk, cited the lack of supplies as the major reason for their lackluster growth projections.
“The main constraint on our production is really is the cells, and I think I have mentioned that before in talks and I think I alluded on that on prior earnings call, so we were addressing the cell supply constraints and any sort of constraints that are non-cell constraints that exist, but the critical thing is the cell production constraints,” Musk said during Tesla’s earnings call.
The major concern with Tesla has always been the feasibility of producing inexpensive, high-quality, electric sport cars. While these concerns came to fruition Tuesday, many analysts remain optimistic about Tesla’s outlook. Jefferies analyst Elaine Kwei did not waiver in her support of Tesla and kept her stock price projection above $200.
“TSLA’s 3Q results beat consensus on revenue and non-GAAP EPS, and deliveries of 5,500 exceeded guidance. A wide range of expectations ahead of the report may have resulted in some disappointment, but in our view, 3Q marked another quarter of remarkable progress since volume deliveries of the Model S began one year ago,” Kwei said following the quarterly earnings call.
After the earnings report, the equity sold off nearly 14 percent to a four-month low of $150. If this past year has indicated anything, it is that Tesla’s stock price will continue to be volatile. However, if Tesla can find a way to overcome its supply constraints, the stock will reach new highs.
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