The Tesla Rorschach Test: Figuring Out Which Numbers Matterby
Is Tesla Motors in good shape? That depends on who’s answering the question.
The believers will point out that the carmaker just turned in a quarterly financial update (PDF) that topped Wall Street expectations and predicted big production gains. Demand, of course, remains through the massive glass sunroof. The haters can point to Tesla’s wider loss and the delivery of fewer cars than promised. Earning in the current quarter, the company warned, will be less than half what analysts expected.
With Tesla’s stock up about 7 percent on Thursday morning, it appears the bulls have won the day—at least until the next widely varied and polarizing financial update.
The tricky thing about Tesla is figuring out what’s important in any given period. Is it how many cars the company made and delivered (7,785 last quarter), or how many were ordered? What about the $350 million that will be spent this quarter to speed up production? Is it the demand for the Model S sedan or the promise of the forthcoming Model X SUV (now delayed another few months)? Maybe it’s how many charging stations the company has installed (206 in the U.S. and Europe). Or how its giant battery factory is coming along. To further complicate the picture, Tesla can crow about the energy credits and electric drivetrains it sells to other car companies ($124 million).
And then there was this from Tesla Chief Executive Officer Elon Musk during Wednesday’s conference call: “Obviously, there’s a whole bunch of things that we could do to stimulate demand if that were our problem. It is not our problem, but people don’t quite appreciate how hard it is to manufacture something.”
If Tesla the company was rendered as a single vehicle, it would have two odometers, three speedometers, and a sound system that played five tunes at once. When Ford Motor talks to investors, it pretty much just tells them how many hundreds of thousands of F-150 pickups it moved. Sure, Tesla is a young outfit—a true growth company in every sense of the word. The kind of tea-leaf reading it demands is common near its California headquarters, where tech concerns measure progress in click-through rates, cost-per-click, and the ever-arcane timeline-views-per-user (thank you, Twitter).
All told, Tesla lost $75 million in the recent quarter, as revenue almost doubled to $852 million. But both of those numbers come with enough caveats to make them virtually meaningless.
What do the smart folks think? Again, take your pick. Deutsche Bank predicts Tesla’s stock price will shoot to $310 in the next few months. JPMorgan Chase expects it to sink to $190, while Goldman Sachs has a target of $216, just below its current level.
It’s a confusing but thrilling ride, particularly with Musk at the wheel calling out at any given time which gauge to pay attention to. It would be helpful to know exactly how many more miles the machine can go, but what’s the fun in that?