Tesla (TSLA) reported second-quarter earnings that left investors and the market as a whole disappointed yet again. The company had finally found its footing after a tough start to the year, but the stock slipped back down 10% Wednesday morning.
The electric vehicle company posted adjusted earnings of just 52 cents per share, below the analyst consensus of 61 cents per share. This was a massive step backward from this time last year when the company delivered earnings of 91 cents.
Revenue was a bright spot, though. It climbed to $25.5 billion from $24.9 billion in 2023, racing an all-time high. The consensus called for sales of $24.5 billion.
This was driven by Tesla’s energy generation and storage business. The company also benefited from regulatory credit sales of $890 million.
But, the profit trend is certainly cause for concern. Gross margin slipped to 14.6% from 16.4% in Q1 of this year. Tesla is struggling with lower volume and prices for its EVs, higher costs associated with AI, and charges attributed to its recent round of layoffs.
One of the biggest concerns is the delay of Tesla’s autonomous taxis, which Elon Musk has referred to as the future of the company. The goal now is to unveil prototypes for these robotaxis by October.
TSLA fell as much as 43% through the first few months of the year after massive disappointments in vehicle sales, but they surged back to wipe those losses and even ended up with a 4% gain on the year leading into this earnings day.
Much of this rally was the result of Musk teasing his company’s Q2 performance – specifically showcasing impressive delivery figures. We wrote about this just a few weeks ago when TSLA sat at $240/share. While many were rushing to buy the stock, we told you to hold off. The stock now sits at just $220/share after today’s news.
So, where does that leave investors – is it time to sell TSLA? We’ve taken another look through the VectorVest stock software and have 3 things you need to see.
TSLA Has Very Poor Upside Potential With Very Good Safety and Fair Timing
VectorVest is a proprietary stock rating system that takes complex technical indicators and distills them into clear, actionable insights. This saves you time and stress while helping you win more trades.
The 3 ratings are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy.
You’re even given a buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s the breakdown for TSLA after today’s earnings:
- Very Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential to AAA corporate bond rates and risk. It’s a far superior indicator than the typical comparison of price to value alone. TSLA has a very poor RV rating of 0.24, albeit slightly improved from a few weeks ago.
- Very Good Safety: The RS rating is a risk indicator. It comes from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 1.27 is very good for TSLA and unchanged from when we last discussed the stock.
- Fair Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. This is the biggest difference between the stock now and a few weeks ago - TSLA has an RT rating of 0.96, which is deemed fair but a bit below the average. The stock had excellent timing when we last analyzed it.
All things considered, the overall VST rating of 0.95 is fair for TSLA - and the stock is currently rated a HOLD. However, you’re going to want to stay up to date on this situation if you’re invested in this stock. Learn more with a free stock analysis at VectorVest today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. TSLA dropped 10% Wednesday morning after yet another lackluster earnings day, featuring a profit miss and postponement of what Musk has been telling investors is the “future of Tesla”. The stock itself has very poor upside potential, very good safety, and fair timing.
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