Tesla’s Q2 FCF Likely to Miss Materially, Stay Buyers on Any Weakness
2022.07.19 17:41
NewStreet Research analyst Pierre Ferragu sees the risk of Tesla’s free cash flows numbers missing Q2 estimates by quite a margin.
Several headwinds, like lower deliveries, the slow ramp of Texas and Berlin, staff layoffs, and Bitcoin price plunge, are likely to weigh on Tesla’s Q2 results, Ferragu warned in a client note today.
The analyst expects Tesla (NASDAQ:TSLA) to report GAAP EPS of about $1.3, which represents a decline of 55% compared to the first quarter.
“This is largely reflected in consensus expectations,” Ferragu added.
However, Ferragu expects a much bigger miss on FCF.
“Consensus expectations are not aligned with the impact lower deliveries will have on working capital. We expect breakeven FCF vs consensus $900m,” he added.
The analyst also echoed the views of several other Tesla analysts when it comes to the H2 setup.
“Tesla achieved a new monthly production record in June, and continued ramp of Berlin and Texas will support strong sequential growth.”
Net-net, Ferragu urged clients to buy “any weakness on the print” as Tesla’s long-term thesis remains intact.
“We expect material earnings revisions in the next 2 years,” Ferragu concluded.
