Grading Tesla's 2016 Guidance
I spotted this on Forbes magazine. You may read below:
Tesla announced its December quarter results and provided guidance on how many cars it plans to build in 2016, gross margins for the Model S and X, cash flows and profitability. While the company came up short in the December quarter, especially on profitability, it gave enough 2016 metrics that is has halted the slide in the stock, now down 36% for the year.
Fell short in revenue and earnings
Tesla’s 17,478 vehicle sales came in at the low-end of its original guidance of 17,000 to 19,000 units. While this was slightly above the 17,400 it announced in early January it was the bottom line where the company really disappointed.
The Street was expecting non-GAAP EPS of a profit of $0.09 but it came in at a loss of $(0.87). Even when you back out the $67 million in impairment charges the bottom line was still a loss of $(0.36) per share. Since investors were more focused on 2016 guidance this seems to have not mattered to them. The grade for the quarter is a C-.
Elon Musk, Tesla’s CEO, guided to unit growth of 60% to 80% from its 50,658 cars it sold in 2015. This put vehicle guidance at 80,000 to 90,000 for the year with 16,000 in the first quarter.
The full year guidance was above what most investors were expecting and is helping the shares rally today. At the mid-point of 85,000 cars it would be faster growth than what the company delivered in 2014 or 2015 and there is a significant ramp with only 16,000 in the first quarter.
Tesla has faltered before and fallen short of its guidance numbers so the full year number looks aggressive. I’ll give them an A for effort but they will have to show they can achieve this to keep the grade.