Tesla (TSLA) -2% shares opened higher this morning after its Shareholders Meeting last night but the stock has since rolled over.
Shareholders have had a tough year (-36% year-to-date) after the company reported dismal first quarter results, highlighted by a huge net loss and lower than expected deliveries, leading many to question demand for its electric vehicles.
Last night, Elon Musk unsurprisingly allayed demand concerns when he said, "I want to be clear that there is not a demand problem".
However, the stock continues to act as if there may be demand issues. Weak first quarter results and numerous price cuts for the Model S and X this year indicate the company is trying to spur demand. On May 31, the company even announced unlimited free super charging for Model S and X vehicles bought before the end of the quarter.
After years on the market and a reduced tax incentive this year, it's no surprise that Model S and Model X demand may be impacted by the mass market Model 3.
Model 3 deliveries fell sequentially, hindered by logistical bottlenecks in the first quarter, which means the second quarter Model 3 deliveries should bounce back nicely.
Last night, Elon Musk said, "We have a decent shot at a record quarter... if not, it's going to be very close."
This basically confirms what we already learned from a leaked email a couple weeks ago.
So, we can assume Model 3 deliveries will impress in early July, but Model S and X are still in question.
In late April, Tesla guided for a second quarter net loss and a return to profitability in the third quarter. Elon Musk did not exude confidence with respect to profitability last night, "Profitability is always challenging when you're a fast-growing company."
Tesla did not provide an update on the full self-driving timeline last night after the company basically shifted its investment thesis to being a leader in autonomy (which also serves as marketing to consumers) as opposed to a profitable car maker.
Elon Musk hinted toward a potential insurance acquisition after mentioning that initiative on the first quarter earnings call. He also hinted toward a potential mining effort to secure the supplies needed for its lithium ion batteries, the key supply cost and constraint for electric vehicles.
It's safe to say that Tesla short sellers, which currently account for 35% of the float, are having a good year. Elon Musk's credibility has come into question after a never-ending series of bold predictions have failed to pan out over the years.
There are uncertainties for Tesla shareholders on a number of fronts. With respect to the product pipeline, the Model Y crossover and Semitruck are expected to begin production next year, but a pickup trick is also in the queue. All of these products with high potential will require crisp execution while Elon Musk has so far demonstrated a lack of ability to meet targets in a timely fashion.
Earnings estimates for this year have fallen to a $1.00/share loss from a $6.00/share profit six months ago.
The stock fell to a three-year low earlier this month before finding support at the $180 level. Tesla will report second quarter deliveries in the first week of July.