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Oct. 23, 2019, 2:07 p.m. EDT

Tesla is about to show investors if it’s back on the road to profitability

Q3 results are ‘fork-in-the-road moment’ for electric-car maker

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By Claudia Assis, MarketWatch


Bloomberg News/Landov
Tesla Inc. vehicles recharge in Concord, Calif., last week.

Tesla Inc. is expected to report third-quarter results after the bell Wednesday, with more than the usual amount of scrutiny going into the Silicon Valley car maker’s quarterly update.

For the first time in more than a decade, Tesla /zigman2/quotes/203558040/composite TSLA +0.81%  is looking at a year-over-year dip in quarterly revenue. Many on Wall Street also view the third-quarter results as a bellwether for Tesla's hopes of returning to profits, and are keeping a keen eye on end-of-year guidance.

The sales drop is likely due to a mix of deliveries that have skewed heavily toward the Model 3, the company’s cheapest offering, putting profit margins at the center of Wall Street’s list of concerns for Tesla.

The company earlier this month reported third-quarter deliveries, its proxy for sales, that fell short of expectations. Tesla said it delivered about 97,000 vehicles in the third quarter, including 79,600 Model 3 sedans.

Analysts surveyed by FactSet expected the company to deliver about 99,000 vehicles, including 80,200 Model 3s. The company said its third-quarter orders were at a record, and it was entering the fourth quarter with an increase in its order backlog.

See also: Tesla stock reels after electric car maker’s missed sales

Tesla delivered 84,000 vehicles in the third quarter of 2018, including about 56,000 Model 3s. For the year, Tesla hopes to deliver 360,000 to 400,000 vehicles, which means it needs to deliver at least 105,000 vehicles in the fourth quarter to hit the lower end of that goal.

On Oct. 23, a conference call with analysts at 6:30 p.m. Eastern is to follow results.

Here’s what else to expect:

Earnings: Of 33 analysts polled by FactSet, Tesla is expected to report an adjusted loss of 46 cents a share for the quarter. That would contrast with an adjusted profit of $2.90 a share in the year-ago period. Tesla reported GAAP and adjusted per-share profits in the third and fourth quarters of 2018.

Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted loss of 25 cents a share for Tesla.

Revenue: The analysts surveyed by FactSet expect sales of $6.43 billion for Tesla. That would be down from $6.82 billion a year ago. Estimize sees revenue of $6.61 billion for Tesla.

Stock movement: Tesla shares have lost about 23% this year, and are down about 13% in the past 12 months. That compares with gains of 20% and 15% for the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.95%  and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.80%  this year, and respective advances of 9% and 6% for the 12-month period.

The analysts surveyed by FactSet on average rate Tesla stock a hold with a price target of $268.78, an upside around 5%.

What else to expect: Tesla’s vehicle sales mix also comes into play on its closely watched cash situation.

/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 352.17
+2.82 +0.81%
Volume: 4.81M
Nov. 15, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$62.38 billion
Rev. per Employee
$439,627
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/zigman2/quotes/210599714/realtime
US : S&P US
3,120.46
+29.35 +0.95%
Volume: 0.00
Nov. 15, 2019 5:04p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
28,004.89
+222.93 +0.80%
Volume: 288.91M
Nov. 15, 2019 5:04p
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