Shares in Tesla Motors, Inc. (NASDAQ: TSLA) are priced down over two percent in pre-market trading this morning after falling 4.98 percent yesterday in slightly heavier-than-average volume.
News of analyst comments describing Tesla’s valuation as being in “ludicrous mode,” as reported by Investor’s Business Daily, technical factors, such as the stock’s inability to hold its 200-day moving average, news of Elon Musk’s divorce, as reported by The Inquisitr, and news of the abandonment of plans for a 10 kWh Powerwall, as reported by Value Walk, all seem to be weighing on the market for the shares.
Tesla shares had rallied more than 20 percent in the month of March after sell-side analyst firm Citron published research and a tweet panning the electric car maker and calling for TSLA shares to trade near $100 by the end of 2016, as reported by The Inquisitr. Shares were near their 50-day moving average when Citron published their research and confounded the firm by continuing to rally, only to seemingly finally find resistance at their 200-day line.
A previous Inquisitr report compared the value of Tesla and General Motors Company (NYSE: GM) and concluded that, if valued similarly, TSLA shares might trade near $85, about $15 below the end-of-2016 prediction made by Citron. GM’s $48.36 billion market capitalization appears absurd when held up beside Tesla’s $29.39 billion market cap. One of these companies has revenues of $4.05 billion and the other: $152.36 billion. One might think that, sooner or later, stock prices will catch up with this reality.
As TSLA shares continued their March advance, the market appeared to be ignoring the most important thing about the company, and about every company with publicly traded shares: Tesla isn’t profitable, and Elon Musk and company have missed Wall Street analysts’ EPS estimates for the last two quarters, and by accelerating amounts, as reported by Yahoo Finance.
The first EPS miss came in September 2015, when Tesla reported a loss of $0.58 on expectations of a loss of $0.50, missing by 16 percent, not impressive, but not outside the realm of the ordinary. The second EPS miss might be seen as more troubling. First, it was the second miss in a row. Second, the sheer size of the miss, one would think, would make even the most devout Tesla fan raise an eyebrow. Tesla reported a loss of $0.87 per share, when analysts were forecasting a profit of $0.10. That the market could rally shares more than 20 percent after such news speaks to the absurdity that is the modern mechanism of price discovery known as the stock market.
After being reported at $4.29, 90 days ago, and then falling to $3.12,as recently as seven days ago, TSLA 2017 full-year EPS estimates have been raised to $3.34. Over the past 90-day period, full-year 2016 EPS estimates have fallen from $1.81 to $1.31, and unlike estimates for 2017, have fallen a further $0.02 over the past seven days.
Tesla reports an operating margin of -17.1 percent and a profit margin of -22.0 percent. Management delivered a return on equity of -88.8 percent though 2015. At the end of the 2015 fiscal year Tesla reported a cash position of $1.20 billion and debt of $2.92 billion. Tesla reported a debt to equity ratio of 267.7 percent.
Major institutional holders of TSLA shares as of December 31 included FMR LLC, Baillie Gifford and Company, T.Rowe Price Associates, and The Vanguard Group.
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