Tesla is about to show investors if it is back on the road to profitability
Tesla Inc. is expected to report third-quarter results after October 23, with more than the usual amount of scrutiny going into the Silicon Valley car manufacturer's quarterly update.
For the first time in more than a decade, Tesla
TSLA, + 0.98%
is looking at a decline in the year over the quarter. Many on Wall Street also view the results in the third quarter as a bellwether for Tesla's hopes of returning to profits, and are watching closely at the end of the year.
The sales decline is likely due to a mix of deliveries that have skewed sharply toward Model 3, the company's cheapest offering, and have put profit margins at the center of Wall Street's list of concerns for Tesla.
The company earlier this month reported third-quarter deliveries, its sales proxy, which were not expected. Tesla said it delivered around 97,000 cars in the third quarter, including 79,600 Model 3 sedans.
Analysts surveyed by FactSet expected the company to deliver around 99,000 vehicles, including 80,200 Model 3s. The company said that orders for the third quarter were on record, and that it entered the fourth quarter with an increase in order backlog.
See also: Tesla bearing rolls after the electric car manufacturer's lost sales
Tesla delivered 84,000 vehicles in the third quarter of 201[ads1]8, including approximately 56,000 Model 3s. For the year, Tesla hopes to deliver 360,000 to 400,000 vehicles, which means it must deliver at least 105,000 vehicles in the fourth quarter to reach the lower end of this target.
23. October was a conference call with analysts at 06:30. Eastern is following the results.
Here's what else to expect:
Revenue: Of 33 analysts polled by FactSet, Tesla is expected to report an adjusted loss of 45 cents per share for the quarter. That would be in contrast to an adjusted profit of $ 2.90 per share in the previous year. Tesla reported GAAP and adjusted earnings per share in Q3 and Q4 2018.
Estimize, a crowd sourcing platform that collects estimates from Wall Street analysts as well as buy side analysts, fund managers, business executives, academics and others. , expects an adjusted loss of 34 cents per share for Tesla.
Revenue: The analysts surveyed by FactSet expect $ 6.45 billion in sales for Tesla. That would be down from $ 6.82 billion a year ago. Estimize sees revenue of $ 6.62 billion for Tesla.
Stockpile: Tesla shares have lost about 22% this year, and are less than 1% in the last 12 months. This compares to gains of 20% and 16% for the S&P 500 index
SPX, -0.28%
and Dow Jones Industrial Average
DJIA, -0.08%
this year and respective advances of 9% and 7% for the 12-month period.
The analyzes examined by FactSet, at the average rate Tesla makes an amount with a price target of $ 269.67, an upside of about 4%.
What else to expect: Tesla's vehicle sales mix also comes in to its closely monitored cash situation.
"With Tesla young and trying to scale up, I'm always interested in their free cash flow or burning in a neighborhood," said David Whiston, an analyst at Morningstar. "That's the most important thing to me because it's a measure of health and ultimately its ability to service debt."
Switching to Model 3 as Model S and Model X sales decline, plus increased costs with a fleet of planned new cars and investments in car technologies "always raises the question: & # 39; Is the volume sufficient to offset reinvestment? in the business? & # 39; " so Whiston.
Whiston said he was "cautiously optimistic about another positive free cash flow quarter, especially with the cut line guidelines in 2019 (capital adequacy)" in the second quarter. In addition, Tesla is "a long-term story," and a quarter is unlikely to make or break the company, he said.
Tesla is still enjoying "strong" demand for its vehicles, especially for Model 3, and from people who have not set down deposits, said Bill Selesky, an analyst at Argus Research.
"It's a good sign for me to say that things continue to improve on the demand side. They just need to fix production problems and focus on cost control," he said.
See also: Tesla's "Smart Summon" feature is sparkling and works periodically: Consumer Reports
Another thing high on the investor's agenda is an update on Tesla's China plant and Model 3 production ramp in that country; the plant is expected to reach peak production sometime next year.
Tesla is also expected to provide more details on a timeline for the Model Y, the compact SUV it hopes to launch in the fall of 2020. Nor is personnel news beyond the norm for Tesla; in its second-quarter conference call, Tesla announced its # 2, Chief Technology Officer JB Straubel.
Related: Is Tesla's leadership turnover really high? This analyst is trying to find the answer
In all In that case, the third quarter results "represent a fork-in-the-eye moment for (Chief Executive Elon Musk) & Co.," Wedbush analysts led by Dan Ives said in a recent note.
Tesla, they wrote, "either succeeds in this next step in development and shows the profitability path or otherwise stays on this treadmill by kicking the revenue down further down the road."
