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Tesla Earnings Disappoint, but Future Looks Bright (TSLA)

By U.S. News & World Report

Electric car manufacturer Tesla Motors (ticker: TSLA) reported second-quarter results on Wednesday, missing badly on earnings and very slightly on revenue. But shares merely wavered in after-hours trading.

The company still sees deliveries in the second half of the year of around 50,000 vehicles and is meaningfully ramping up production. TSLA stock was down 6 percent for the year going into Wednesday’s report.

Tesla reported an adjusted loss per share of $1.06 on revenue of $1.56 billion, up 30.5 percent from the same quarter a year ago. Analysts were expecting Tesla to lose 55 cents per share on revenue of $1.62 billion.

Three months ago, the company said it expected to end the quarter producing 2,000 vehicles per week; Tesla said it’s producing “nearly” 2,000 vehicles per week, so it’s more or less in line with its own goals. By the end of the third quarter, TSLA now expects the weekly production rate will be around 2,200, and by the end of the year it should rise to 2,400.

“It is heartening to see that cash inflows through sales and deposits are creeping upward. In sum, (CEO) Elon Musk’s reputation may pull Tesla through over the long term, but there are significant hurdles for him and his management team to overcome,” says George T. Haley, director of the Center for International Industry Competitiveness at the University of New Haven.

Tesla expects automotive gross margins to increase between 2 to 3 percentage points in the third and fourth quarters due to “cost reductions and improved vehicle manufacturing efficiency” in the Model S and Model X.

[See: Car Companies and the Race to Profits.]

The importance of production and delivery numbers. Tesla produced 18,345 vehicles in the second quarter and delivered 14,402, but investors caught wind of that about a month ago when the company issued a news release.

While you can’t expect the market to react to already-released numbers, it’s worth noting that when Tesla announced first-quarter earnings in May, the high-tech automaker projected it would produce about 20,000 vehicles in the second quarter and deliver about 17,000 vehicles. Tesla fell well short of both those numbers.

Tesla also projected in May that it would be able to deliver about 50,000 vehicles in the second half of the year, a commitment it stuck to in its earnings release.

Despite being founded in 2003, Tesla is still in the early phases of its company life cycle. What that means for investors is it’s not currently profitable, and production and demand metrics like production and deliveries hold more weight than they would otherwise.

The Tesla-SolarCity marriage: more important than second-quarter results. While earnings, deliveries and production numbers all seem vitally important from the perspective of short-term-obsessed money managers, the biggest recent news surrounding the company is undoubtedly Tesla’s decision to acquire SolarCity (SCTY) for $2.6 billion.

The move, which thrusts Tesla to the front and center of the solar power industry, effectively makes Tesla a more diversified sustainable energy company rather than just a high-tech, new-age auto titan.

While Tesla investors remain somewhat unconvinced by the merits of the deal — SCTY isn’t close to being profitable and has over $2.6 billion in debt — Tesla CEO Elon Musk insisted the SolarCity deal was made with a long-term mindset.

Medium-term “drivers” for TSLA stock. The most important medium-term catalysts for Tesla and its stock price will be the upcoming Model 3, projected to debut in late 2017. The Model 3 will be the company’s first-ever mass-produced, affordable vehicle, and will retail for $35,000 before incentives.

In the first week that Tesla began taking deposits for the Model 3, customers placed over 325,000 reservations, implying $14 billion in future sales.

In May, in order to fast-forward its production ambitions, Tesla moved up its goal of producing 500,000 vehicles annually by two years, from 2020 to 2018. The “Gigafactory,” the massive battery-production plant in development in Nevada, will be central to these efforts.

When completed, it will be the second-largest building by volume on the planet, giving it unparalleled scale in the electric car industry.

“Benefiting from the anticipated fierce competitions from China and Korea, the average lithium-ion battery pack has already dropped to $150 per KWh from $1,200,” says K C Ma, professor of finance at Stetson University. “The accelerated progress of the Gigafactory in the second quarter led Musk to predict that their cost can go down to $100 per KWh by 2020. This is an exciting outlook since battery cost, around a quarter of the car price, is a deal-breaker for the future of American (electric) car use.”

[See: 10 Ways to Invest in Driverless Cars.]

Longer-term. The enigmatic Musk, sometimes referred to as the real-life Tony Stark, is pushing the boundaries with Tesla’s autonomous driving initiatives. Despite recent wrecks, one fatal, that involved Tesla drivers using the Autopilot feature, Tesla notes that Autopilot is, to date, still safer than human-piloted vehicles.

“This is the first known fatality in just over 130 million miles where Autopilot was activated. Among all vehicles in the U.S., there is a fatality every 94 million miles. Worldwide, there is a fatality approximately every 60 million miles,” the company said in a post on its blog.

Within the next decade, Tesla aims to produce fully autonomous vehicles that are 10 times safer than manually operated ones.

Autonomy is a major part of Tesla’s long-term vision; Musk recently released a 10-year plan for the company that includes letting Tesla owners add their fully autonomous cars “to the Tesla shared fleet just by tapping a button on the Tesla phone app.”

Essentially Tesla plans to go up against Uber, and to allow customers to generate income while they’re at work or sleeping.

[See: 11 Stocks That Donald Trump Loves.]

While the Palo Alto, California-based company’s second-quarter results and third-quarter projections are important, what’s far more important is the long-term plan, which is wildly ambitious and risky — but potentially very lucrative for patient investors.

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Tesla Earnings Disappoint, but Future Looks Bright (TSLA) originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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