Tesla (NASDAQ:TSLA) stock fell 11.7% last week after the company made promises following a weak profit report that missed expectations. At a $39.6 billion market cap, the stock is now sharply below the $57.3 billion market cap General Motors (NYSE:GM) enjoys. The gap will widen further, with GM rising and Tesla falling.
Tesla posted deliveries of 95,356 vehicles in the second quarter, with Model 3 making up 77,634 the bulk of them. Non-GAAP EPS of -$1.12 missed consensus badly by $0.72. GAAP loss was $2.31. The losses should upset bulls because revenue grew 58.8% to $6.35 billion. Bigger losses and more debt suggest that Tesla’s forward guidance of reaching profitability is questionable.
Short-sellers have a 31.7% short float position on the stock. This will pay off, as will those holding option put holders, so long as liquidity continues shrinking. Tesla has easy access to debt and cash because its backers believe it will reach economies of scale. But as Tesla 3 becomes a bigger part of the mix, gross margin pressure will hurt Tesla’s balance sheet.
It may need a refresh on the top-end models to drive sales. Falling demand for Model S and X will hurt the company’s prospects and lead to more losses ahead.
