The myth, the man, the legend, Elon Musk, is back at it again folks. After the bell Wednesday Tesla (TSLA – Analyst Report) announced earnings that came in at 71 cents versus analyst expectations calling for a 54 cent loss. Aside from completely embarrassing any analyst attempting to estimate Tesla’s earnings, Elon offered up some insight to the future. Specifically Tesla’s autonomous car network of the future.
Tesla envisions a rail-hailing network where Tesla owners could rent out their cars when they weren’t being used. While you’re fast asleep, your Tesla could be operated autonomously, picking up passengers and dropping them off throughout the night, and putting money in your pocket. Elon wanted to make it clear that “It’s not Tesla vs Uber, it’s the people vs Uber.” I’m sure Uber is thrilled. That’s a good way to guarantee lifetime surge pricing for yourself. My company isn’t taking down your company, I’m just going to let all my customers take down your company.
Musk said that while Uber and Lyft take a 25% to 43% commission, the majority of the economics would go to the owner of the car. He also vowed to have a self-driving car that could make it from LA to New York by the end of next year. If they can do LA to New York, can you hook up a Chicago to Miami ride?
The tentative name for this robotic taxi network is the Tesla Network. Proving once again that while Musk may be a genius, his naming skills are mad less than average. The first Tesla car was the roadster. Because it was, well, a roadster. Then the Model S luxury sedan. S for, sedan. Then the Model X. Now comes the Model 3. Where’s the creativity?
Where he is creative is all the ways he markets the cool stuff Tesla is doing. Ultimately, this is a car company. As boring as Fiat (FCAU – Snapshot Report) or Ford (F – Analyst Report) . But the excitement comes from everything else that builds the mystique of Tesla. He’s not building a factory, he’s building a gigafactory a thousand times bigger and better. Not an electric battery charger for your car but a super charger which is so much more awesome than a regular charger. Maybe that’s what gets analysts so confused. It’s all the smoke and mirrors.
Heading into the earnings report we had Tesla as a Zacks Rank #4 (Sell). It’s not because we hate Tesla but because analysts had been dropping their earnings estimates and not just for the current quarter. If you look at current year numbers, analysts had dropped their numbers from a $2.33 loss to a $5.03 loss. But again, these analysts are having a tough time gauging EPS. Over the last 4 quarters the Zacks Consensus Estimate has been off by an average of 76 cents. May as well be a hurricane forecaster. It might hit Florida or just spin off into the ocean. I dunno.
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