We share our thoughts on Tesla and examine where TSLA’s Amenity Score has tracked since the start of 2017 in comparison to US Equities and the Automobile Manufacturers GICS Sub-Industry

By
Derek William Valles, PhD FRSA
|
February 4, 2020

Tesla Earnings Analysis: Shortenfreude in Action

Article

Our thoughts go out to those holding shorts in Tesla, Inc. (TSLA) after share prices in the EV manufacturer topped $961 at one point today to finish at $887, up nearly 14% from yesterday's close.

The run up in the stock is now a full on sprint and the ensuing emotional rollercoaster has the trappings of market-based schadenfreude. Perusing the Twitterverse for commentary around $TSLA, we find bulls reveling in the thought of a short squeeze and bears laying down whimsical markers to call upon when the top is inevitably found. Our friend Jamie Powell aptly titled the latest FT Alphaville column “Tesla is nuts, when’s the crash?

Looking back on the 4Q19 earnings call (29 January), we find some justification for an uptrend. Beats on gross profits and free cash flow alongside a guide to “comfortably exceed” 500k deliveries put investors in a simply fantabulous mood. We see the net positivity underlying the conversation between analysts and management on the call reflected in Tesla’s Amenity Score – our barometer for the health of a business – as the company sustained a score exceeding the average for US Equities and Automobile Manufacturers for two quarters in a row (see chart):

Amenity Score vs Share Price: Quarterly Trend

The >30% YTD run going into earnings and the >10% boost in after-hours trading following results baked a lot into the proverbial cake. Share price gains of >50% in the four days of trading since will test any buy rationales on the grounds of valuation. Keeping in mind the caution of analysts and the conviction of bears, we remind our readers that only 5 of 13 Tesla earnings calls since the start of 2017 have earned a net positive Amenity Score. It’s been a wild ride, but our Amenity Score has left very little for the bears this time around. It may be a cold winter...

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About Amenity

Amenity Analytics is the industry leader in providing insights from unstructured text by using Natural Language Processing (NLP) assisted by Artificial Intelligence (AI) and Machine Learning (ML). Amenity’s NLP system is a sector-agnostic, language-dependent tool for quantitative text analysis that is deployed across the financial services industry and beyond.

This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.

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