May 07 - Elon Musk's luxury electric car maker reported earnings that were better-than-forecasts, but investors fled on a a disappointing second quarter outlook. Bobbi Rebell reports.
Tesla took it on the chin when it reported earnings. Better-than-expected on the top and bottom line. But its second quarter outlook kept the stock going in reverse- adding to recent pain. S&P Capital IQ's Efraim Levy has a neutral rating on Tesla: SOUNDBITE: EFRAIM LEVY, EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "I think this is a stock that has an extreme valuation. The question is- is it warranted? And that is the battle between the bulls and the bears. We are cautious about it . Going into this we had a $200 target price which is right where it had closed. And you know, it's something that with momentum stocks you have to be very careful. It can go very quickly one way or the other." But the price may soon be right according to Theodore O'Neill of Litchfield Hills Research: SOUNDBITE: THEODORE O'NEILL, MANAGING DIRECTOR, LITCHFIELD HILLS RESEARCH (ENGLISH) SAYING: "I think this is a buy and I'd use any dips here as buying opportunities. I see it's weak after hours. I don't see anything in this report that is negative from a business perspective." As far as the fundamentals, there is a lot for investors to like. Plans for its lithium-ion battery plant are on track- though no word on the location. They did confirm Panasonic will be the only company producing in the Gigafactory. And sales numbers for the Model S were on track- and they are boosting production on the sedan. But Levy points out the road is still bumpy: SOUNDBITE: EFRAIM LEVY, EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "The big risks well one we mentioned is technology related to getting the battery costs down and succeeding with the factory as well as the new model. I guess one other positive I saw was they seemed to be moving ahead in developing that Model X- the mass model. And you know, that is the key to, as I mentioned to success going forward. There is also risk with competition. BMW and others are having electronic vehicles also that are similar to what Tesla is offering and BMW is a luxury competitor so if there is another alternative they could lose some sales that way." Tesla added it's planning to expand in China as fast as possible- and that it could be one of their largest markets within a few years.