Model 3 is likely to be the main focus of Tesla Inc (NASDAQ:TSLA) Q1 earnings.
Palo Alto, California, based electric car and renewable energy company Tesla Inc (NASDAQ:TSLA) is scheduled to report its Q1 2017 earnings on Wednesday, May 2nd. The earnings report will cap a record quarter for Tesla which is entering a crucial operational phase. It has been quite a good quarter for Tesla's shareholders who have seen the stock rally to record levels. On the other hand, the shorts are feeling the pain. In his recently released letter to shareholders, Greenlight Capital's David Einhorn said that "It was a difficult quarter to be short the bubble basket, and TSLA in particular,". He further added, "With holders reluctant to sell, the stocks can only go up - seemingly to infinity and beyond. We have seen this before. It's painful for the shorts, as the TSLA CEO has been happy to remind everyone via Twitter". Mr. Einhorn expects this stock bubble burst sooner or later. However, given the recent momentum and strong quarterly results, shorts may have to wait for some more time.Tesla Inc to post record revenues.
Analysts expect Tesla Inc to report a non-GAAP EPS of -$0.81 against the revenues of $2.6 billion. Both the figures represent a strong improvement from the comparable quarter last year. The expected non-GAAP EPS loss of $0.81 represents more than 44% improvement from the last year's comparable quarter EPS of -$1.45. On a GAAP basis, analysts expect Tesla to report an EPS of -$1.15, compared to an EPS of -$2.13. Tesla's margins may get a boost from its enhanced autopilot option if the company decides to record a portion of revenue from autopilot update this quarter. Tesla did not record any revenues from the autopilot update in the previous quarter as the software updates were delayed, which had an adverse impact on its gross margins. The delay in the autopilot update has resulted in a class action suit against Tesla Inc. On the top line front, the expected revenue of $2.6 billion represents a YoY growth of more than 125%. The revenue growth will be driven by SolarCity acquisition and record deliveries.Tesla Inc reported record production in first quarter.
At the beginning of the month, Tesla Inc had reported that it had delivered a record number of cars in the first-quarter. Tesla (NASDAQ: TSLA) delivered just over 25,000 cars in Q1 2017, which represents a 69% YoY growth, up from 50% growth in deliveries it had registered in Q1 of last year. A large part of the growth was driven by higher Model X deliveries which grew almost 4.8x, from 2400 deliveries in Q1 2016 to 11,550 deliveries in Q1 2017. Tesla also reported a record production in the current quarter. Tesla produced 25,418 vehicles in the current quarter, up from 24882 vehicles it produced in Q4 2016.
Apart from the revenue and EPS figures, investors will also be looking out for commentary on its capital requirements. In its 2016 10-K filing, the company had stated that it will increase its capital spending this year as it races to produce over 500,000 vehicles in 2018, up from 84,000 in 2016. Tesla also faces heavy capital requirements for the production of Model 3. Tesla had said that it will be spending around $2-$2.5 billion in the first half of the year. Tesla had already raised $1.15 billion through a mix of debt and equity issue. It remains to be seen whether Tesla will go for another round of fundraising this quarter as many analysts expect it to do. The heavy capital expenditure is likely to be a big drag on the company's bottom line.Model 3 will remain the focus.
Model 3 is likely to remain the main focus during the Q1 earnings. Model 3 is critical to Tesla's growth as well as its profitability. With Tesla Inc planning to launch the vehicle in July, investors should look out for any updates about Model 3 itself, as well as the production plans for the vehicle. During the Q4 earnings call, Tesla has said it expects to see limited vehicle production in July. The company then aims to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018. Apart from the Model 3, investors should look out for any updates on the recently announced planned to launch newer vehicles including semi-autonomous trucks.Tesla stock hits new all-time high going into the earnings.
Shares of Tesla motors hit a new all-time high of $314.8 on Friday, before closing the day at $314.07. Tesla stock is in a bull run and has continued to trend up in spite of valuation concerns and some negative news. The post-earnings movement in the stock will be majorly determined by the progress on the Model 3 front and its plans regarding capital requirements.
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