Tesla (NASDAQ:TSLA) earnings: What to watch

Analysts expect soaring profits and investors are hoping for big guidance. Can the electric-car company deliver?

| More on:
Tesla stock represented by four tesla electric vehicles parked against mountain backdrop

Image source: Tesla

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

It's been a wild year for Tesla Inc (NASDAQ: TSLA) shareholders. The stock is up more than 400% year to date. Over the past year, shares are up nearly 800%.

While the growth stock's big gain recently is great for shareholders, it means expectations are high going into the electric-car company's third-quarter earnings report this week. Ahead of the quarterly update on Oct. 21, here's a preview of some of the key areas investors may want to check on. 

Profitability

Sharp revenue growth for Q3 is pretty much already in the bag. A few days after the quarter ended, Tesla said it delivered record quarterly deliveries during the period, with total deliveries rising 43% year over year.

The bigger question about Tesla's financials during the quarter is regarding the company's profitability. Analyst estimates for the automaker's earnings per share (EPS) for the period span a wide range, with the lowest estimate calling for $0.23 per share and the highest for $0.98. The average estimate is notably $0.56, which translates to a 51% jump compared to the year-ago quarter. 

Factory construction progress

Investors will also look to Tesla's quarterly shareholder presentation to get a progress update on the company's ongoing expansion efforts. In Q2, Tesla said it had an annual production capacity at its factory in Fremont, California of 400,000 units for Model 3 and Model Y combined. But management said that this installed capacity would extend to 500,000 units at some point in 2020. Did Tesla achieve this before Q4 started?

Further, Tesla said it was building Model Y production capacity at its factories in Shanghai and Berlin. Look to see whether the automaker completed construction on these important production lines. 

Guidance for vehicle deliveries

Finally, investors will want to see whether Tesla is maintaining its guidance for 500,000 deliveries this year. To deliver 500,000 vehicles in 2020, Tesla would need to deliver more than 181,000 vehicles in Q4 alone. This would imply huge growth both year over year and sequentially, as Tesla delivered about 112,000 and 139,000 vehicles in the fourth quarter of 2019 and the third quarter of 2020, respectively.

Regarding vehicle delivery guidance, investors should also look to see if Tesla provides any commentary on demand for its vehicles. Did Tesla exit Q3 with a record backlog of vehicle orders? Without record orders, Tesla may not maintain full confidence from investors in the company's growth story.

Tesla reports its third-quarter results after market close on Wednesday.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

US economy and sharemarket with piggy bank
International Stock News

What on earth is going on with the US stock market?

Let's dive in and see.

Read more »

A graphic illustration with the words NASDAQ atop a US city and currency
International Stock News

Why Big Tech became a huge wreck across the Nasdaq last night

Jerome Powell and his compadres shocked the market with an unexpected outlook.

Read more »

a man sits at a bar leaning sadly on his basketball wearing a US flag sticker on his cheekbone near a half drunk beer and looking despondent as though his basketball team has just lost a game.
International Stock News

The Dow Jones is on its longest losing streak in 46 years. What's going on?

The Dow is on a losing streak in the middle of a boom.

Read more »

A person leans over to whisper a secret to a colleague during a meeting.
International Stock News

Despite recent news, analysts still say Nvidia stock is a buy. Here's why

Last month, Nvidia was the most valuable company in the world.

Read more »

A young girl looks up and balances a pencil on her nose, while thinking about a decision she has to make.
International Stock News

After gaining 2,100%, is Nvidia stock done?

Nvidia has taken off as one of the key players in chips and services for artificial intelligence.

Read more »

A young couple in the back of a convertible car each raise a single arm in the air whilst enjoying a drive along the road.
International Stock News

Why Tesla stock just jumped again

Wedbush's Dan Ives thinks the stock will keep moving higher thanks to Tesla's self-driving technology.

Read more »

An older couple hold hands as they bounce happily high in the air.
International Stock News

Why the Alphabet share price just leapt higher

Investors seem to hope the Trump administration will be friendly to Alphabet and its big-tech peers.

Read more »

A panel of four judges hold up cards all showing the perfect score of ten out of ten
International Stock News

Top Wall Street analyst calls Tesla stock a top pick. Is it a buy now?

Tesla shares have been on fire lately, rising more than 70% since the November 5 election.

Read more »