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The Ratings Game: Here’s what analysts are saying about Tesla’s mixed first-quarter earnings

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Tesla Inc.’s first-quarter earnings kept Wall Street analysts divided, with some citing mixed results and others focusing on “another solid quarter from Musk & Co.”

Tesla
TSLA,
-3.17%

stock fell more than 4% in midday trading Tuesday, adding to earlier losses. The electric-car maker late Monday reported adjusted per-share profit well above Wall Street consensus and sales that slightly missed views.

Read: Tesla’s first-quarter sales rise more than 70%, but stock slips

In a wide-ranging call after the results, Chief Executive Elon Musk and other Tesla executives discussed Tesla’s supply challenges beyond chip shortages, the company’s bitcoin bet, and updates about models and products, among other topics.

Still, some key questions remained unanswered, Adam Jonas at Morgan Stanley said in a note.

That included a more firm timing for the debut of the Cybertruck, Tesla’s pickup truck slated to go on sale later this year but dependent on battery innovations still in pilot production, he said. Tesla executives also didn’t comment on rising anti-Tesla sentiment in China, Jonas said.

Tesla is still a “must own” stock for investors building a portfolio focusing on electric- and driverless-cars as “we see the risk of not owning the shares as exposing investors to greater risk of underperformance than by actually owning the shares,” he said, reiterating his buy rating on Tesla shares.

Jeffrey Osborne at Cowen echoed similar concerns about the call, saying that investors listening in were likely to come away from it “feeling discouraged.” There was little time left to go over questions from the sell-side analysts and the call “only served to highlight the lack of near-term catalysts,” Osborne said.

The company’s first-quarter results were “as a strong print for Musk & Co.” as sales were slightly below “bullish expectations,” analyst Dan Ives with Wedbush said in his note.

Itay Michaeli, an analyst at Citi, was more bearish: “The initial after-hours stock reaction is understandably negative as Tesla’s clean Q1 results were below consensus and are likely be viewed as underwhelming, but we don’t think the quarter changes the LT [long term] bull/bear debate much. No change to our view on the stock at current valuations.”

Read: Tesla turns a profit on bitcoin sale, but its ‘Technoking’ and ‘Master of Coin’ say it won’t become a habit

Danni Hewson, an analyst at broker AJ Bell, warned investors to look beyond the record profits: “There are some niggling numbers for Tesla to deal with — $518 million is the amount of cash generated, not from car sales but from regulatory credits, sold to more polluting car makers.”

“It’s a huge figure, one that’s almost doubled compared to the same quarter last year and one that shouldn’t be relied on long term as other manufacturers make the switch to electric models,” Hewson said.

Read: Tesla has some major PR issues. What they mean for the stock.

Philippe Houchois, an analyst at Jefferies, wrote in a note entitled “Fodder for Bulls and Bears” that it was another mixed quarter, solid on gross margin but weakish on earnings before interest and taxes: “We think first-quarter numbers support current consensus in a year that is still mostly about execution rather than vision.”

Tesla stock have gained nearly 350% in the past 12 months, compared with gains around 45% for the S&P 500 index.
SPX,
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So far this year, the stock is up around 1% compared with the S&P’s 11% advance.

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