Prior to last night’s earnings report, Tesla (TSLA) was a momentum name that was holding its own in the face of a meltdown of the high-flyers of 2013. Tesla was up over 30% in 2014, and investors were smug in their decision to hold onto the stock going into 2014. That was until last night, where an earnings beat wasn’t enough to satisfy Wall Street’s mandate for explosive growth.
Tesla reported Q1 EPS of $0.12 (ex-items) versus street estimates of $0.10, and revenue of $713 million that topped analyst estimates of $699 million. The company reported it produced 7,535 Model S vehicles, and that it expects to deliver 7,500 Model S sedans in the second quarter. This apparently was not what Wall Street was looking for, especially for a stock that is trading at nearly 180 times forward earnings (2014 estimates).
One person who didn't own Tesla into last night’s earnings was Jon Najarian of optionMONSTER, AKA Dr. J. “I don’t own Tesla,” he explains in the attached video, “because so many of these stocks have been taken out to the woodshed, that I couldn’t take any more pain.” Stocks like SolarCity (SCTY) have left a bitter taste in the good doctor’s mouth (today’s nice earnings move notwithstanding).
One thing that has Najarian intrigued with Tesla is the Elon Musk factor. “I do think Tesla’s got some big news coming, and that’s the gigafactory. Whether or not you and I really believe this is a catalyst to drive the stock significantly higher, doesn’t matter. It’s a news event, it’s Elon Musk in front of a microphone, and he is gold.”
When it comes to valuation though, that’s where the numbers are not in Tesla’s favor. “The numbers last night were just horrific,” Najarian howls, “as far as what people would want to see from a company with a valuation like Tesla’s.”
Ultimately it’s the grand vision from CEO Elon Musk that investors want to hear, whether it’s the stuff of sci-fi dreams like rocket propulsion or hyper loop parts delivery systems. It’s the genius of Elon Musk that seems to be keep the Tesla bulls in the game.
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