Larry Busacca / Getty Images for The New York Times
Tesla CEO Elon Musk.
- Tesla will report second-quarter earnings next week, and they're expected to be as bad as first-quarter earnings.
- Tesla is also burning cash at a furious rate, leading short-sellers to intensify their pressure on the company.
- However, Tesla's stock has held up - dismal Q2 earnings probably won't cause it to crash.
Estimates vary, but when Tesla reports second-quarter earnings next week, the outcome should be ugly. The carnage could match or exceed the first quarter, when Tesla lost $3.35 per share, with revenue of $3.41 billion.
The second-quarter was when, after earnings were announced and the markets noted that they weren't as bad as expected - Wall Street figured on a loss of $3.42 per share - Musk flipped out on a couple of analysts and sent the stock spiraling downward.
But here's the thing: right after first-quarter earnings broke, Tesla's stock basically didn't do anything until the Elon show started. I felt sort of vindicated at the time because I thought the first-quarter would actually be kind of blah for the market: Yep, Tesla lost a ton of money, again, but we know why.
To overuse an already overused phrase, the negative news was priced in.
So here we are again, three months later, and Tesla is actually up about 4% - not solidly above $300, but not below it, either. True, we're miles from the run to nearly $400 that markets witnessed in 2017. But on balance, that was an irrational surge, particularly given that Tesla didn't crash into its problems with its Model 3 rollout until late in the year.
So the scenario is pretty much the same as far as the stock price goes. Earnings will be objectively terrifying, but with just a few days to go before Tesla reports, shares have hung in there and Tesla's market cap, at around $50 billion, remains higher than Fiat Chrysler Automobiles' and Ford's.
My bold prediction: If you're expected Tesla to nose-dive next week, you'll be disappointed. The company will absorb the bad news. Here's why:
Get the latest Tesla stock price here.