Tesla and its stocks are definitely not looking so good. In fact, in a report from Barron’s, the electric vehicle manufacturer’s margins are expected to be pressured once buyers decide to wait for an update prior to purchasing the company’s high-end Model S and X cars.
Oppenheimer’s very own Colin Rusch reportedly lowered his 2019 revenue, including all non-GAAP profit estimates, largely because of concerns relating to sales for the San Francisco-based company’s more profitable cars. As a matter of fact, the company’s shares, which saw a significant down of nearly 20% this year, managed to soar at least 2% to $271.71 recently.
Rusch spiraled down his full-year 2019 estimates, which would cover both non-GAAP earnings per share and revenue to around $1.93 and $26.5 billion, respectively. The previous figures, in particular, were around $6.78 and $28.3 billion. Apparently, though, the numbers Rusch mentioned are way belov the current consensus levels in Wall Street.
Tesla is slated to reveal a report about its entire first-quarter results, particularly right after the closing of the market come April 24. Elon Musk, the company’s CEO, that it is very unlikely for a net profit to take place.
These lowered estimates from Rusch’s only suggest expectations of a much “lighter mix of Model S” simply because of an upcoming refresh cycle. Model 3 volumes, on the other hand, are without a doubt arriving at the much lower price range and could possibly exist throughout this year.
Along with trim improvements, Rusch is expecting to see a significant improvement from the Model S powertrain. He even expects the design to reflect where exactly the automaker is headed in terms of powertrain configurations.
Tesla, however, has been shy in revealing plans relating any major update to both the S and X lately. Fortunately for the company, the vehicles sales made an interesting move. It turns out that the sales performance drew massive attention from investors earlier this month, particularly during the time when the company revealed its first-quarter production as well as all of its delivery number reports.
There is indeed a very potential speculation relating to how and if ever the electric vehicle company could update its array of higher-end models. Just last year, reports manage to cite some substantial internal documents, all of which promote the idea of an upcoming update to both the S and X models. While nothing concrete has been set, this update is expected to take place later on this year. Apparently, though, Tesla neither denied nor confirmed the possibility of the said update.
The announcement made by Tesla on its first-quarter noted deliveries involving Model S and X, which is said to be at least 12,100, down. It is a substantial decline from the fourth quarter. As far as reasons for the decline are concerned, there is a handful of them. For instance, it could refer to the demand and likely complicated process of maximizing the effect of federal tax credits. Another interesting reason is the decision of buyers to go for the lesser-expensive vehicles from Tesla.
However, the numbers also managed to raise a handful questions, with one aimed at the demand for the aforementioned modes. And yes, this gives even as Tesla continues to look at the possibility of expanding aggressively across its product lines. For some observers, the company might just need a product refresh. They believe that if the car manufacturer does this, it could just re-energize consumers and allow them to consider buying the more-expensive models.
As of press time, the Model S’ price starts at $85,000 before incentives. The sedan apparently is still the company’s highest-margin product. Even more so, it can provide a good amount of cover directed towards lower margins.