Tesla confirms brisk orders for solar tiles

In the first week of May, electric car manufacturer Tesla Inc. (NASDAQ: TSLA) reported fiscal 2017 first-quarter revenues that more than doubled compared to last year’s similar quarter. The revenues also surpassed the Wall Street’s Consensus estimates.

However, the company reported a wider than anticipated net loss. That brought down the stock price by 10% to about $290.

However, the stock quickly climbed back to $324 level. One of the main reasons for the recovery in the share price was the record 25,051 deliveries in the first-quarter.

Now, the company’s other venture – solar tile manufacturing – has caught the attention of market as explained below. Thus, we anticipate the stock to move up further into uncharted territory in the days to come.

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The Palo Alto, California-based company reported fiscal 2017 first-quarter revenues of $2.70 billion, up from $1.15 billion in the similar period last year and greater than $2.62 billion anticipated by the Street analysts. Automotive revenue more than doubled to $2.30 billion in the recent quarter, compared with $1.03 billion in the first-quarter of 2016. During Q1 2017, Energy generation and storage revenue was $213.94 million, up from $22.73 million in Q1 2016.

In the March quarter, net loss widened to $330.28 million, from $282.27 million in the same period last year. Due to higher share count, on a per share basis, Q1 2017 net loss narrowed to $2.04 per share, from $2.13 per share in Q1 2016. On a GAAP basis, Q1 2017 automotive margins increased to 27.4%, from 24% last year. During the first-quarter, gross margins in the Energy generation & storage segment increased to 29.1%, from 20.3% in the prior year’s corresponding period.

Excluding acquisition related costs, among others, the net loss in the quarter ended March was $214.99 million or $1.33 per share, compared to $192.61 million or $1.46 per share in last year’s corresponding quarter. On average, analysts’ polled by Thomson Reuters had anticipated a net loss of $0.81 per share.

The company reconfirmed that it is on track to deliver 47,000-50,000 cars in the first half of 2017. Tesla is also in the process of opening hundreds of new stores and service centers before launching Model 3. The company aims to increase production to 5,000 vehicles per week at some time in 2017. In 2018, Tesla hopes to achieve a production of 10,000 vehicles per week.

Tesla also confirmed that the orders for solar tiles surpassed their expectations. After taking into account the production ramp up, the company expects demand to last well into 2018.

At the end of first-quarter, the cash balance stood at $4 billion, up from $3.4 billion in the previous quarter. Thus, considering the strong growth in revenues, on track deliveries, and optimistic outlook for solar tiles, fundamentally, the stock is expected to stay bullish in the short-term.

The historic price chart indicates consolidation of the stock at 315 levels. The MACD has crossed above the zero line, while the momentum is rising. That indicates a possibility of an uptrend in the stock.

We prefer to bet on the uptrend by purchasing a call option from a suitable binary broker. The contract expiration date is preferred to be around June 7th , while the entry is targeted when Tesla trades near $325 in the NASDAQ.

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