< Back to News

Tesla Motors to announce earnings 05/11

Model S Hong Kong 2_large

Tesla Motors, is expected to announce earnings today, 5th November 2015 after market close. The report will be for the fiscal Quarter ending Sep 2014.

What to expect from Tesla Earnings

Shares of Tesla have jumped 60% so far this year through early Tuesday, compared with a 9.2% gain for the S&P 500 index, and a gain of 0.6% for the Russell 2000 RUT, -0.50% a small-cap benchmark.

Tesla is expected to break even in the third quarter, according to analysts. That would compare with earnings of 12 cents a share in the same period a year ago.

During Tesla’s second quarter letter to investors, the company guided the following for its third quarter:

  • Production of 9,000 vehicles.
  • Delivery of 7,800 Model S vehicles, leasing of around 300 vehicles.
  • Operating expenses to rise by around 20 percent for research and development and 15 percent for selling and general administration.
  • Automotive gross margins to be consistent with previous quarters.
  • Marginal non-GAAP profitability.

Quarterly Developments

Tesla’s quarter was full of new developments. Investors will be paying attention to any comments Tesla’s management that further expands on the developments.

  • Tesla announced it increased the drive unit warranty for its Model S vehicle to eight years and infinite miles. The company did note that the move will have a “moderately negative” impact on its earnings in the near-term.
  • Stifel Nicolaus published a bullish report on Tesla by upgrading shares to Buy with a $400 price target. The analysts stated that they find it reasonable to see the company achieving a run rate of 1,000 units per week by the end of 2014. Analysts at Goldman Sachs separately said that they believe Tesla will need another $6 billion in capital through 2025.
  • Tesla CEO Elon Musk said in September that its new Gigafactory in the state of Nevada will mass produce electric vehicles for decades to come. The eccentric billionaire expects Tesla’s factory to produce 50GWh in annual production by 2020. Panasonic is expected to contribute 30% to 40% of the factory’s total cost as part of a collaboration between the two companies.
  • A few days later, the state of Nevada confirmed $1.3 billion in tax breaks and other incentives had been approved.
  • Inside EVs estimated Tesla’s monthly unit sales were 2,500 in September which would make a monthly sales record for the company.
  • Tesla introduced a dual-motor Model S vehicle with a range of 275 miles on a single charge with a 0-60 mph acceleration of 3.2 seconds.
  • Tesla announced a new leasing program in the US along with a three-month, no questions asked return policy for new vehicles. The move came at the same time as reports surfaced that September sales plunged 26% year-over-year. However, Musk tweeted that September sales were in fact 65% higher than they were a year ago, contrasting earlier reports.

Vehicle Deliveries

Perhaps the most important metric to watch when Tesla reports earnings will be vehicle deliveries. Year-to-date, Tesla has sold just over 14,000 vehicles. Guiding for over 35,000 deliveries by the end of the year, Tesla would need to sell 21,000 vehicles in the second half of 2014 to meet its goal.

What should investors expect in Q3? Tesla guided for 7,800 deliveries in the quarter. Considering the company’s guidance has been within 100 vehicles of actual results in the past two quarters, the Street is likely expecting deliveries to be in line with Tesla’s guidance. 7,800 deliveries would be up only slightly from the 6,457 and 7,579 vehicles delivered in Q1 and Q2.

In order to meet its target of delivering over 35,000 vehicles by the end of the year, investors should look for Tesla to guide for 13,200 deliveries or more in Q4.

With more demand than it can handle, the volatility in Tesla’s quarterly deliveries is mostly a reflection of the company’s ability to ramp up supply and the timing of its emphasis on delivering to particular regions.

Tesla’s third-quarter results will be posted here, likely within 15 minutes of market close on Wednesday. Investors can tune into Tesla’s live quarterly earnings question-and-answer session at 5:30 p.m. EST at the same link.