8 things investors will look for in Tesla's earnings report

This Tesla car can go 96 km / h in 1:17 seconds

(CNN) -

Tesla is the most secretive automaker on the planet, so investors are always eager to pore over its quarterly report and conference call, when they can finally get a mouthful of information bigger than a tweet.

The last two quarterly results have disappointed them.

The stock has fallen nearly 30% from its all-time high just before its fourth-quarter report in late January, with more than a third of that drop in the share price since the company reported first-quarter results in April.

So whether the best-performing 2020 stocks can get back on track will largely depend on what investors hear on Monday night, when Tesla releases its second-quarter results.

These are the main topics they will analyze:

How are things in China?

Unlike other automakers, Tesla typically only reports global numbers and doesn't break down sales by country or market.

But if you want to reassure investors, you may need to provide details about your sales in China, which is not only the largest market for all car sales, but also the main market with the largest share of sales for EVs.

Tesla was hit by widespread reports of safety problems in China, including the recall of nearly all cars made at its Shanghai factory and a protest by Tesla owners at the Shanghai auto show in April.

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"China's growth stories are Tesla's top priority," said Dan Ives, technology analyst at Wedbush Securities and owner of a Tesla.

"This is their key market, we believe that 40% of their sales will come from there next year. I think that is the axis for the shares to go up or down."

Although Chinese sales of electric vehicles from other automakers are growing, Tesla's sales in China fell 9.2%, according to statistics cited by Gordon Johnson of GLJ Research, an analyst who is one of the harshest critics of Tesla.

"It seems clear that Tesla has a demand problem in China," he wrote in a recent note.

"China's weak domestic sales in the second quarter of 2021 will likely translate into weak second-quarter earnings for Tesla."

How did you get your earnings?

Analysts surveyed by Refinitiv expect Tesla to report adjusted revenue of more than $ 1 billion for the second consecutive quarter and net income of about $ 650 million.

Both would be company records and mark the eighth consecutive quarterly profit after years of losses.

But critics of Tesla point out that its net income has never exceeded the money it makes from selling regulatory tax credits to other automakers for whom EV sales represent a very small percentage of their total sales.

Those other automakers use the credits they buy from Tesla to meet environmental standards, thus avoiding large fines.

Tesla made $ 518 million from those sales in the first quarter, but even Tesla admits it can't count on those sales continuing as other automakers start selling more of their own EVs.

Critics of the company say it's proof that Tesla can't make money just selling cars.

If its net income eventually exceeds those credits, as estimates suggest, it will be a major milestone for the company, Ives said.

"That would throw one of the main bearish arguments against stocks out the window," he said.

What's going on with your bitcoin holdings?

In February, Tesla revealed that it used some of its available cash to buy $ 1.5 billion in bitcoin.

In April, it revealed that it sold some of those holdings and posted net income of $ 101 million from its cryptocurrency trading, adding to the argument that the company doesn't actually make money selling cars.

The bitcoin transactions made some investors nervous, Ives said, especially since the cryptocurrency has lost more than a third of its value since then.

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What's going on with supply chain problems?

The entire global auto industry is struggling with a shortage of computer chips.

With other automakers increasing the production of their own electric vehicles, Tesla now has increased competition for the raw materials that make up large electric vehicle batteries, such as lithium.

In May, Musk tweeted that Tesla had to raise the price of its cars due to rising raw material costs.

The outlook for raw material prices and the supply of parts like chips and batteries will be key to investor expectations of Tesla's sales for the rest of this year.

What's going on with the new plants in Texas and Germany?

Tesla has a history of getting new plants up and running much faster than traditional automakers.

It has a plant under construction near Austin, Texas that will build the Model Y SUV and eventually the Cybertruck pickup, as well as another near Berlin to serve the European market, where it is losing ground in electric vehicle sales to Volkswagen.

Having two plants under construction simultaneously is the most ambitious expansion Tesla has ever undertaken, and the prospect of when the plants will be up to speed will be key to investor expectations going forward.

Tesla said in April that it expected both plants to have limited production later this year and "volume production" in 2022. It did not specify what that means.

What's the latest on the Cybertruck?

With several established automakers like Ford and General Motors poised to sell their own electric trucks, it's important that Tesla soon gets the Cybertruck, its first truck, into the hands of consumers.

In January, Musk said he expected "volume production" in 2022.

Then in March, he tweeted "Update probably in the second quarter."

He said the focus now was on finishing the Texas plant, calling that job a "beast."

Investors are eager to receive that update.

Tesla is about to introduce a new Cybertruck 0:58

What are the plans to open up Tesla superchargers to electric vehicles from other manufacturers?

Last week, Musk tweeted that "we will open our Supercharger network to other EVs later this year."

As is often the case when posting news via tweet, there were no details to help investors assess the business impact of such a move.

It could be significant.

"For 2030, we conservatively estimate Tesla's supercharging revenue of $ 2.9 billion, a figure that does not include any revenue from non-Tesla vehicles," Morgan Stanley auto analyst Adam Jonas wrote in a later note. to the tweet.

Musk will almost certainly be asked about plans to open the network to other companies' cars during the conference call.

What's the outlook for fully autonomous cars?

Tesla withdraws distracted drivers from autonomous driving 1:29

This is one of the reasons Tesla shares have largely outperformed traditional car stocks: investors' belief that it is closer to offering self-driving cars, or FSDs, than any other company.

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Musk continues to promise previews for the FSD versions in his tweets.

And Tesla CFO Zachary Kirkhorn spoke on the latest earnings call about the significant income potential of drivers who pay FSD by subscription.

But so far the FSDs have been more promise than reality.

Investors will be eager for the latest outlook and the income Tesla expects to derive from them.

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