After the deal with Solar City, Tesla was set to release its second quarter earnings report on Wednesday, August 3.
Ahead of the earnings report of the American automotive company, Tesla Motors settled the merger with Solar City. Market experts forecasted a 36 percent increase of its revenue after the ramped up of deliveries.
Tesla denied the speculation of the tech analysts that it was just giving a financial assistance to save the SolarCity from collapsing through their current deal. Tech experts pointed out the recent fall out of SolarCity as the stock lost around 57 percent in 2015 and cut the installation expectations for two times this year. Adding to this, SolarCity is still deals with $3.25 billion debt of its solar installer.
Currently, Solar City joggles with unsteady operations and manufacturing capability- sectors where Tesla is highly lauded. The energy services provider could have a great advantage in terms of the interest of the customers in their products as Tesla has established its credibility on its power-related products.
On Monday, Elon Musk clarified that the team up with SolarCity aims to provide the most efficient source of power generated from the batteries and the solar panels technology of SolarCity. Tesla has been moving mountains on its investment in battery factories in Nevada and other products coming soon.
However, some analyst thought that the automotive company was being smart in this deal. Michael Morosi, an analyst at Avondale Partners LLC shared ‘Tesla provides an immediate source of differentiation. It places them in a different stratosphere. Tesla knows how to manufacture things. SolarCity is about to become a manufacturer. They gain immediate knowledge when they need it most.’
SolarCity Chief Executive Officer Lyndon Rive restated that its company will remain cash-flow positive in the fourth period of the year despite the actualization of the deal. ‘We’re larger than the next 50 solar companies combined. In order to continue to maintain this differentiation, you’ve got to do more than just vertically integrate the services. You’ve got to vertically integrate the product as well.’
Edwin Mok, an analyst at Needham & Co, was clearly optimistic on his view regarding the merger. ‘Combined with a more aggressive approach to reduce operating expenses, we believe the business could turn profitable, potentially in the next 12 to 24 months.’
Tesla Q2 Earnings Forecast
In other news, Tesla is set to release its second quarter financial report whereas the company is forecasted to have an adjustment loss of 52 cents higher than the previous 48 cents. Analysts also expect for a revenue of $1.6 billion as the company has reported a ramp up of deliveries and an upbeat sales of residential batteries.
However, the company was also challenged recently on the incidents that Model S and Model X got involved with. Tesla could have reached its delivery goals for these models without the controversy. The company forecasted around 17,000 sales in general, but, it stepped down to 14,370 . Tesla even opted to lower the price of the said units to accumulate profit amid the criticisms.
Meanwhile, Tesla still had 373,000 nonbinding reservations for Model 3 as the demand and interest for the electronic vehicle persist. The company remains on the game as it plan to build more electric vehicles and introduce new models.
Shares of Tesla traded 2.04 percent lower to $230.01 with a market capitalization of 34.16 billion a day before the announcement of its earnings report. Currently it has a gross margin of 21.50 percent while its operation margin stands at -20.30 percent.
The stock has a 52-week low of 64.59 percent and a 52-week high of -14.51 percent. It has a 20-day SMA of 5.96 percent and a 200-day SMS of 7.17 percent. Further, it has a an earnings per share of -7.81 while its dividend yield hasn’t been disclosed.
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