Has Tesla turned around?
That was the big question on Wall Street on Thursday when shares in the tech-forward car maker had their best day since 2013 after the company's third-quarter earnings release.
Experts are divided, but some, including Jim Cramer, liked what they saw in the results that ignited the move.
This is what they say:
Jim Cramer, host of CNBC's "Mad Money," said the conference call felt like it was from a more traditional car manufacturer:
"I have to tell you: Ford sounded like Tesla , and Tesla sounded like Ford. Tesla was like listening to a call from a real company that made cars and made money … It was seamless. What about China? The fastest to grow, set up a factory and hire people This was ̵[ads1]1; I'm not saying it was muted [CEO] Elon [Musk] but it was a guy making cars. I like this type of Elon who is not wise. … Now people hate this. … You say something good about Tesla and people say, "##; Hi, you said it was bad. You said something bad about Tesla, and now you've got me short. & # 39; Look, the fact is that Tesla delivered profits, but there are many who think it was still hocus pocus I come back and say I look at the cash position and I say you know what? … It was just a normal conversation. for the reason that the stock [up] was so much because he wasn't on Twitter saying, "This was the biggest quarter ever, and I'm going to make 500,000 cars." There was none of that. It wasn't. And the China thing? Look, it turns out that – by the way, like [PayPal CEO] Dan Schulman – if you work with the Chinese government, you can still do a tremendous business. "
Craig Irwin, senior research analyst at Roth Capital Partners, was not so keen on Tesla's outlook:
" What I am looking at is that revenues are down [$] 520 million years over years. Why? We have 10,000 fewer Model S and X cars this year compared to last year. The prices of the Model 3 are actually off by about 20% year over year, and it looks like quicksand to me. So we have to look at 2020 and ask: Should we see further deceleration? Should we see further probable price pressure on the Model 3? I think so. I think it's exaggerated at [$] 300. [ Host: And model Y won't save the story? ] I'm a skeptic. I think it probably ends up cannibalizing the three in a very similar way as when we saw X coming in with S. "
Gene Munster, co-founder of Loup Ventures, said the report will focus investors on the bull again case for Tesla :
"This was a great quarter for them, and I reluctantly use the word & # 39; great & # 39; because I think it's such an emotional share one way or the other, and I don't want to choose sides here. I want to stay straight and narrow down the road. And specifically what happened – and in retrospect, they told us that this would happen in their June letter, that they had taken some income from the deferred component. Probably the biggest missing gap between the revenue-fragmented loss and the strong earnings is that they have, call it $ 880 million in deferred income. Last quarter they said there were [$] 567 million that would be recognized over the next year, but … the incremental piece we learned from the letter they just released was that they still have almost  500 million to recognize in the future. And what that probably means is part of this upside in revenue – perhaps considering it a third or a half of it – was related to deferred, mainly 100% margin revenue that came from this full self-driving feature that they have sold. So the reason why this is an important factor, as we think of this quarter in relation to Tesla history, is that deliveries have gone in the right direction. I am surprised that their guidance will require … a record number [of vehicles] in the December quarter, but the revenue brings their ability to shave off this deferred income, making it easier for the company to substantially improve the revenue portion, which has obviously been one of the negatives around this story. And they can maintain it, that [$] 570 million. They could take parts of it for the next two years. And then, the whole idea that … we're a block away from things that collapse, I think that story took a step back and the overall story took a step forward today. "
Cathie Wood, a noted Tesla bull and CEO of Ark Invest, which has a long-term target price of $ 4,000 per share, said the short sellers were probably" covered "when the stock increased over 17%:
" I think … some of the shorts cover. They are stretching to make a negative case now. They are trying to find out, are there any accounting gimmickry that has caused this sincere surprise? And when we dig through accounting and numbers in general, if you look at revenue growth year to date, 21%. Unity growth up 65% in a declining automotive industry. We believe total car sales have peaked. So this is quite dramatic and I think the shorts will be forced to cover as time goes on. "
New Street Research analyst Pierre Ferragu said the positive results were a reflection of Tesla's leadership in the car room: " I think no one is around, to be honest. Tesla introduced the Market S seven years ago, and today, in what manufacturers are on the road or announcing, nothing matches Tesla Model S. 2012. And Tesla Model S today is actually 40% better than seven years ago. So that's how Tesla went from being a disruptive innovator seven years ago to, in fact, an industry leader. They have seven years of experience others don't have, and I don't think anyone is close to it. "