Tesla is once again in turmoil.
The electric automaker's stock tanked by over 14% on Thursday after the company released its second-quarter earnings report. The larger-than-anticipated loss, coupled with more executive departures, spooked investors and Wall Street analysts alike.
But not all experts are turning bearish on Tesla. Here's what three of them had to say fresh off the report:
Gene Munster, founding and managing partner at Loup Ventures, said the market was discounting some key pieces of this report:
"Tesla is always an emotional story. ... I'm going to try to go right down the middle and look at these results unemotionally. And I think that it is an overreaction. ... The stock should be down, as a starting point, because the expectation was that they would increase their gross margin from 20% to slightly higher. Recall a couple quarters ago ... that it was 24%, so this would be the third consecutive quarter of a decline. But I would put from a 20[% gross margin] to a 19% as a modest decline, especially because the mix, that big 78,000 delivery number of Model 3, was driven by the cheapest versions of Model 3, the lowest profitable margin on those Model 3s. And so I think that that 19% actually is somewhat respectable given the way the mix was in the quarter, and I think you can argue that 19% is not zero or a loss. I want to just shift gears and talk about putting that loss into perspective: $408 million. Big number. We were looking for a loss of $110 million. [$]117 [million] of that [$408 million] loss was a one-time restructuring. ... So, to answer [the] question about, 'How do you have that big of a loss if you have those record deliveries?' They spend on other things, in particular [the] Shanghai Gigafactory. I encourage anyone to do a Google search, a YouTube video, of where that's at right now; most impressive how quickly that's coming together. They're spending a boatload of money to advance that. And so, I think this — the fact that they continue to expect demand moving in the right direction, the fact that they've really got their arms around manufacturing — is generally moving in the right direction. ... [But] I don't have a good support, even though I'm a believer in Tesla and think that this stock can go much higher. I don't have a very clear avenue when I talk about valuation because it is obviously difficult or impossible, at this point, to try to value this company off any sort of current financials."
Garrett Nelson, senior analyst at CFRA, however, saw Tesla's outlook as quite bleak:
"We think this is an extremely demoralizing release for Tesla. I say that because the stock had bounced almost 50% from the low in early June, and there was some expectation that they might beat here. The bar was pretty low for the quarter, but they lost $1.12. It was a big miss during a quarter in which they had ... record-high vehicle sales. So, you have to look at this and question what the path to profitability looks like for Tesla going forward if they can't generate a profit on record-high sales. The problem is they posted about a 19% automotive gross margin for the quarter. That's a step back from what they did in the first quarter, and it's because four out of every five vehicles they sold during the quarter were Model 3s. Now, that's an inherently lower-margin vehicle, and that's a problem for them. Customers aren't buying as many Model S and Model X vehicles, and, really, the next catalyst is the opening of their China factory. But the problem with China is auto manufacturers are ... notorious for struggling, from a profitability standpoint, over in China. And the China auto market, from a demand standpoint, has pretty much collapsed over the last year. So, this isn't a pretty picture for Tesla."
Dan Ives, managing director and equity analyst at Wedbush Securities, called the report an outright "disaster" for the bulls.
"For the bulls, this is a disaster story in terms of that gross margin. You already knew what demand was in terms of growth, but it comes down to can they do this profitably? You need to see something with a 2 in front of it. This is something that's definitely going to be a gut punch for the bulls in terms of that gross margin number. ... That's really the crux of the bull-bear thesis right here, is that can they be profitable with the lower-priced, lower-margin units? And that's really been the issue. You can sell more cars; can you do it profitably? If not, ultimately, this company will have to raise more capital next year. That's why it's such an issue for the Street."