Tesla Motors 1st Quarter Earnings Report

Welcome to the Investors Trading Academy event of the week. Each week our staff of analysts and educators tries to provide you a better understanding of a major market event scheduled soon and that have an effect on the global markets. With earning season drawing to an end traders are eagerly waiting for Tesla earning after Elon Musk unveiled the new mass production car with great fanfare last month. Tesla is likely to re-enter the green territory and begin posting a net profit in the third quarter of 2016. Tesla posted a net profit in 1Q13, when analysts were expecting the company to lose money in the quarter. It’s important to note that 2013 was a remarkable year for Tesla. The company exceeded its vehicle deliveries and revenue guidance, and it also made announcements about its new Gigafactory, which would produce lithium ion batteries to bring down battery costs by more than 30%. Analysts expect the luxury electric car maker’s per-share loss to widen to 57 cents amid production and Gigafactory investments. Revenue is projected to jump 45% to nearly $1.6 billion. The jump marks a third straight quarter of faster top-line growth. Tesla Motors has almost crossed the 400,000 mark in orders for its new Model 3 sedan, CEO Elon Musk told reporters at a press conference in Norway, as detailed in a Reuters report. “We are now almost at 400,000 orders for the model 3,” Musk said was quoted as saying, adding that the demand for the entry-luxury all-electric vehicle “surprised even us.” The reservations bring in $400 million in capital for the California carmaker, which has to expand its production dramatically to be on target with an expected delivery schedule that starts in late 2017. At an average expected price of $42,000, the amount of preorders could result in $16.8 billion if everyone goes through with a purchase. Tesla said late Wednesday that it will post its first-quarter earnings after the stock market close on Wednesday May 4. Analysts polled by Thomson Reuters expect on average a loss of 57 cents a share, deepened from a 36-cent loss in the year-earlier quarter, as Tesla tools up its factory. They expect revenue of $1.61 billion, up 45%. Two weeks ago on April 7, Tesla said Model 3 preorders had topped 325,000 in their first week of availability. The $1,000 fully refundable reservations had reached 115,000 in their first day before the design of the Model 3 was revealed at a launch party at Tesla’s Los Angeles design studio on the night of March 31. According to the latest Bloomberg consensus, 45.5% of analysts covering Tesla Motors have given the stock “buy” recommendations, while 27.3% of analysts have given it “hold” recommendations. The remaining six out of the total of 22 analysts have recommended a “sell.” Wall Street analysts might be maintaining a mixed view on Tesla due to the production constraints that the company has been facing lately. It will be interesting to see how soon the company can bring significant improvements to its production side. By Barry Norman, Investors Trading Academy - ITA