Tesla Inc. (ticker: TSLA) stock demonstrated a muted initial reaction to the company’s first-quarter earnings report. Investors who don’t quite know what to make of the tiny electric car company with the huge earnings losses and a market cap larger than both Ford Motor Co. (F) and General Motors Co. (GM) are certainly not alone.
Wall Street analysts are polarized on Tesla, and the recent earnings report did little to clear up the picture. Tesla reported revenue of $2.7 billion, topping consensus analyst expectations of $2.62 billion. However, Tesla also reported a per-share earnings loss of $1.33, falling well short of analyst estimates of an 83-cent-per-share loss. In addition, Tesla reported a negative $622 million in free cash flow in the quarter.
To some investors and analysts, Tesla’s first-quarter earnings report indicates the company is still on track to take the auto industry by storm with the highly anticipated launch of the Model 3 later this year.
“We remain buyers at current levels and believe continued execution will drive shares higher,” Baird analyst Ben Kallo says.
“Even with all the risks, we think growth investors can’t ignore this stock,” Piper Jaffray analyst Alexander Potter wrote in April.
At the same time, several Wall Street analysts and some big-name investors believe Tesla’s shares are currently priced at ridiculous levels.
“For the time being, investors remain hypnotized by Tesla’s CEO,” hedge fund manager David Einhorn said on Wednesday. “We’re skeptical that the company will be able to mass market its Model 3 at volumes and margins and justify the current valuation.”
“We believe the market should not ignore fundamental headwinds that persist with regards to TSLA’s stationary storage business, Model 3 profitability and eventual need to raise cash,” UBS analyst Colin Langan says.
“TSLA stock is disconnected from fundamentals; it is more driven by momentum,” Barclays analyst Brian Johnson wrote in April.
Tesla’s earnings report appears…
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