Is The End Near For Tesla?

Photo Credit: Bit Boy

Tesla Motors, Inc. (TSLA) Consumer Discretionary - Automobiles | Reports August 3, After Market Closes

Tesla is scheduled to announce its second quarter results tomorrow, after the market closes. The automaker has been in the news a lot recently and not for good reasons. Just last week the company agreed to buy SolarCity for $2.6 billion which will unite two Elon Musk founded company. Nepotism and bailout are the two biggest takeaways from the deal as SolarCity is failing and showing very little upside. Tesla is also dealing with its first fatality due to the autonomous driver feature and attempting to meet sales expectations.

The Estimize community has set the bar very low for Tesla this quarter. Analyst are calling for a 53 cent loss per share right in line with earnings from a year earlier. That estimate has declined by 442% since Tesla’s last report in May. Revenue is anticipated to increase by 35% to $1.55 billion, marking a considerable slowdown from the previous two quarters.

Under its current model, Tesla has turned itself into a cash sinkhole. The company has turned a loss for 6 consecutive quarters as it continues to burn through investor’s cash. One of the biggest problems for shareholders is when will Elon Musk’s lofty goals and ideas ever turn a profit.

The Model 3 appeared to be moving the company in the right direction. It is a compact and inexpensive version of the Model S that had accumulated an astronomical amount of pre orders. Tesla even raised an additional $1.6 billion in a stock offering targeted to meet production. But for whatever reason, Elon Musk decided that its resources were better used acquiring the struggling SolarCity. The deal sent Tesla shares tumbling and now the stock is down 15% in the past 12 months

Its other vehicle, the Model X, is receiving mixed reactions nearly a year after Tesla delivered the first units. Customers have complained about glitches and inefficiencies that weren’t apparent in the flagship Model S vehicle. At the current pace, Tesla is unlikely to meet its 80,000 deliver goal by the end of the year.

Last month Elon Musk introduced a new master plan that included producing an electric semi-truck, pickup, small SUV and bus type vehicle. Investors would probably like the current issues to be resolved first before moving forward, but that doesn’t seem likely.