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The Tesla Motors stock price is down 4% this week after mixed earnings and an announcement about Tesla's deal to buy SolarCity Corp. (Nasdaq: SCTY).
While investors are cautious about this week's news, we see this dip in the Tesla Motors stock price as an excellent buying opportunity.
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But before we get to our Tesla stock price outlook, here's what investors need to know about the Tesla Motors Inc. (Nasdaq: TSLA) earnings report...
Tesla Motors Stock Price Flat on Earnings Today
After Wednesday's close, Tesla posted a Q2 2016 loss of $1.06 per share on $1.56 billion in revenue. Consensus estimates were for a loss of $0.52 on revenue of $1.62 billion.
While earnings and revenue missed expectations, Tesla showed big increases in production and deliveries. Those have been areas of concern for investors previously.
Here are the biggest numbers to know from the report:
- Tesla delivered 14,402 new vehicles in Q2, including 9,764 Model S and 4,638 Model Z cars. That was slightly ahead of last month's estimates.
- Tesla said it remains track to deliver 50,000 vehicles in the second half of 2016, as previously forecast. If Tesla reaches that goal, it will hit its original guidance of between 80,000 and 90,000 vehicles for 2016.
- Tesla said it finished Q2 making 2,000 vehicles per week. In the full quarter, Tesla produced 18,345 vehicles, which was a record. That's an 18% increase over the first quarter and up 43% year over year.
- Tesla expects to make 2,200 vehicles each week by the end of Q3, and 2,400 a week by the end of FY 2016.
- New vehicle orders rose 67% year over year.
- The company said it completed the design phase for its Model 3, Tesla's more affordable version of its high-end cars. Some production equipment for the Model 3 is ready, and Tesla expects to start building the body and general assembly centers later this year.
- After the Model 3, the next priority for Tesla will be developing a small crossover vehicle dubbed the Model Y. CEO Elon Musk said he expects strong demand for this vehicle. He estimates between 500,000 and 1 million unit sales annually.
- Tesla said it is seeing strong demand from customers wanting to lease its cars. Direct leasing is expected to rise from 8% of deliveries in Q2 to 15% in Q3.
- Despite heavy spending on production improvements and the Tesla Gigafactory, the company's cash position improved. As of June 30, Tesla had $3.25 billion cash on hand thanks to a $1.7 billion offering in May and $40 million in $1,000 deposits for the upcoming Model 3.
- The construction schedule for the Tesla Gigafactory is on track to support volume Model 3 production in late 2017.
- As for autonomous driving, Musk said the new technology will "blow people's minds." Although he declined to provide details, Musk said it already blows his mind.
While many of the figures in the earnings report were bullish, the Tesla Motors stock price has been flat in morning trading today. So for the week, the TSLA stock price is still down roughly 4%.
At Money Morning we know quarterly earnings reports are important, but we take a much longer view on Tesla Motors stock. And that's why we see this Tesla Motors stock price dip as an excellent buying opportunity...
Why the Tesla Motors Stock Price Dip Is a Buying Opportunity
Tesla Motors stock price is usually volatile after earnings, so today's lack of action is a surprise. Options traders were pricing in an approximately 6% move ahead of the report.
Shares rose and fell just 2% after hours and were down a modest 0.08% at $225.33 today.
Money Morning experts believe Tesla stock is one of the best long-term investments on the market. But they make it clear it's not for everyone. The TSLA stock price tends to be volatile, so it's best for long-term investors willing to take on some risk for rewards delivered in five to 10 years.
Money Morning Technical Trading Specialist D.R. Barton, bullish on TSLA stock, says it is "head and shoulders ahead in the electric car front."
Musk's vision and ability to create innovative products has thrust Tesla to the front of the electric vehicle market. Without question, many investors buy shares because of Musk himself.
"I think Musk is the most innovative CEO on the planet and that he sees value others don't yet recognize," Money Morning Chief Investment Strategist Keith Fitz-Gerald said in 2015. "Cars, batteries, innovative business models - nobody knows where it will go but ultimately if you're along for the ride, I think it'd be very hard to go wrong over time."
Earlier this week, Fitz-Gerald reiterated that optimism, since what Musk's doing is "shaking up Detroit and rewriting the automobile industry whether executives are ready or not."
Dougherty & Co., noting Tesla's substantial lead in battery technology and powerhouse brand, reiterated its "Buy" rating with a $500 price target. That would be a gain of more than 122% from today's price.
At $225, the Tesla stock price is up 46.98% over the last three years and a meteoric 802.27% over the last five.
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- MarketWatch: Tesla Earnings Miss Mark, Company Promises 50,000 Deliveries in Second Half
- TechCrunch: Tesla Misses Q2 Earnings, Delivers 14,402 Vehicles
- USA Today: Tesla Misses Wide on Earnings