Analyst: Tesla is burning money again; this is not a viable business model

By:
on Apr 27, 2021
  • Analyst: Tesla is burning money again; this is not a viable business model.
  • Tesla reported record deliveries for the fiscal first quarter on Monday.
  • The stock is under pressure despite market-beating quarterly results.

Tesla shares were reported over 2% down in after-hours trading on Monday, despite posting better-than-expected financial results for the first quarter. The stock also remained under pressure in premarket trading on Tuesday.

Commenting on the impact of the global chip shortage, CEO Elon Musk of Tesla (Nasdaq: TSLA) said on the call:

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“Q1 was one of the most difficult supply chain challenges that we have ever experienced at Tesla. The global chip shortage affected a whole range of parts.”

Gene Munster of Loup Ventures joined CNBC’s Squawk Box on Tuesday

Tesla Inc. on Monday reported £7.48 billion of revenue and 66.92 pence per share of earnings for the fiscal first quarter.

The American electric vehicle and clean energy company would have missed in terms of sales without the EV credits. Tesla also included bitcoin sales as revenue. Debating on that, Gene Munster, co-founder and managing partner at Loup Ventures, said on CNBC’s Squawk Box on Tuesday:

“You have to subtract those from the overall performance, but they are still relatively small in the grand scheme of things. The simple takeaway is that those are negatives, but it doesn’t change the long-term trajectory. Ultimately my view is that this is rare what’s happening with Tesla, which in my view is a definitional growth story. We have a 109% vehicle delivery, despite the supply chain issues. In the case of Tesla, I think delivery is the most important figure, and that shows that demand is good now.”

GLJ Research’s Gordon Johnson’s comments on Tesla’s earnings report

On the contrary, CEO Gordon Johnson of GLJ Research commented on Tesla’s earnings report and said:

“Tesla actually missed on Bloomberg estimates. This is the fifth straight quarter in which, excluding EV credits, Tesla has lost money. Excluding credits and bitcoin sales, it lost $181 million this quarter versus $131 million a year ago. So, record deliveries, but they’re losing more money. They are selling more cars but cutting prices significantly to lose more money.”

“Look at their other business segments. In their solar segment, their gross margin was negative 20% versus negative 8% last quarter. If you look at the energy segment, 13 consecutive quarters of negative gross margins. Their other segments are losing significant money. If you take a step back, their free cash flow fell by $1.65 billion. They are now burning money again. This is not a viable business model,” Johnson added.  

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