Here comes Tesla … (TSLA)


Elon Musk

  • Tesla is set to report third-quarter earnings on Wednesday shortly after the 4 p.m. closing bell. 
  • Wall Street analysts don’t expect the company to return to profitability for this period. 
  • Investors will be watching the company’s margins after it churned out a record number of vehicles for the quarter. 
  • Historically, shares of Tesla have moved an average of 8% in either direction following its quarterly reports. 
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Tesla is set to report its third-quarter financial performance on Wednesday following the close of markets.

Wall Street analysts polled by Bloomberg expect Elon Musk’s electric car company to remain unprofitable, a state it slipped back into earlier this year after two quarters of sustained profit.

Here’s what they’ll be watching:

  • Earnings: $-0.24 per share
  • Revenue: $6.45 billion
  • Gross Margin: 17.7%

The company on October 2 revealed a record number of vehicle production and deliveries during the third quarter, which came in at the low-end of expectations and sent shares falling roughly 7% at the time.

Now, it comes down to Tesla’s ability to capitalize on those cars leaving its factory.

“The key going into earnings will be the Gross Margin profile in 3Q given the lower margin Model 3 dominated units which makes getting out of the red a challenging task which remains the laser focus of the Street,” Daniel Ives, an analyst at Wedbush

“That said, some clear positives for Tesla are around the Giga 3 build-out in China which represents opening a pivotal chapter of production and ultimately demand in the region over the coming years.”

Tesla has long said its third factory in Shanghai should be producing vehicles by the end of the year, and all indications point to that remaining the case. This week, shortly after the factory was hooked in to the state electrical grid, Tesla received permission from local authorities to begin manufacturing cars there.

Investors will also likely be looking for updates on Musk’s proposed million-strong network of autonomous robo-taxis, which he said earlier this year could hit the roads by 2020. This technology is key to some investors’ thesis behind their stake, but also the source of much skepticism.

Lastly, Tesla’s revenue from sales of zero-emissions tax credits could help pad its balance sheet as it has in the past, to the tune of $216 million and $111 million in the first two quarters of 2019.

“We believe investors have not focused on Tesla’s credit sale opportunity,” Maynard Um, an analyst at Macquarie, said in a note to clients this week. “With emissions standards tightening in 2020, particularly in the E.U., we believe TSLA is well positioned to benefit from incumbent OEM needs to acquire credits or pool vehicles.”

Historically, Tesla’s stock price has moved an average of 8% in either direction following quarterly financial reports, and options pricing leading up to Wednesday’s is no exception. 

SEE ALSO: One of Tesla’s most vocal investors sold more than $39 million of the stock ahead of the company’s earnings report

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