Tesla shares soar due to the anticipation of third quarter results
Tesla shares soar due to the anticipation of third quarter results
Stocks soared on Tuesday after he announced plans to report quarterly results earlier than expected, fueling speculation that he has good news to deliver.
Investors anticipate the next quarterly report with more suspense than usual because CEO Elon Musk promised that Tesla will record a net profit and a positive cash flow for the three-month period, based on his belief that Tesla could recharge your money loss operations Maintaining strong performance of your model 3 sedan.
Investors expected results to arrive next week or later, but Tesla said late on Monday it would publish its third quarter financial report after markets closed on Wednesday. Tesla's share price, which until Monday had fallen almost a third since its peak this year, rose almost 13% during Tuesday's trading to close at $ 294.14.
"Game theory suggests that initial / surprise reports are good news," Morgan Stanley analyst Adam Jonas said in a note to investors on Tuesday. "Tesla is at the most critical point in the ramp of its most important product (Model 3) and could be said to be at the most critical point of its liquidity / access to capital, since it has been a public company. Why would Tesla push the introduction of adverse news in the market now?
In general terms, analysts have been less confident than Mr. Musk in Tesla's ability to generate profits. According to a survey conducted by FactSet, they estimated on average a net loss of 95 cents per share for the last quarter based on generally accepted accounting principles. That compares with a loss of $ 3.70 per share in the third quarter of last year. Revenues are expected to increase to $ 6.1 billion, according to FactSet, from $ 2.98 billion from the previous year.
Analysts expect Tesla to report an adjusted loss of 3 cents per share in the latest period compared to $ 2.92 per share the previous year, according to FactSet on Tuesday.
If Mr. Musk's prediction is confirmed, it would be the third quarterly net benefit in Tesla's 15-year history. Tesla made a profit of $ 22 million in the third quarter of 2016 and $ 11.2 million in the first quarter of 2013. An annual profit has never been reported.
High stakes for the quarter intensified the focus on Mr. Musk, whose series of recent mistakes have raised questions about his mentality. In particular, he tweeted on August 7. Messages that say he had secured funds to take Tesla privately.
The tweets sent actions that went off and collapsed, as it was clear that the agreement was not finalized. Mr. Musk recently resolved the claims of the Securities and Exchange Commission that his tweets deceived investors. As part of the agreement, he he remains as CEO, but must resign as president within the next weeks. He is not allowed to be president for three years. It is expected that Tesla will soon announce a new president and two additional independent directors.
The turmoil of Tesla and the episodes of Mr. Musk have helped fuel the argument of street vendors that the company was overvalued and its bets against.
A good showing could be a turning point for opinions on Tesla, said Ben Kallo, an analyst at Robert W. Baird & Co., in a note to investors on Tuesday. "While some think it will take several quarters of execution to transform the narrative, we believe that a good Q3 and a favorable outlook in the conference call should be enough to drive the surge in shares," he said.
Some long-time bears were already anticipating a rebound. Citron Research, which has been marketing Tesla for five years and has a lawsuit against the company for private tweets, said on Tuesday it had changed its view of the automaker, saying its electric cars were "destroying the competition."
Citron cited Tesla's sales performance against the future potential of the competition, including plans for Chinese and European factories, a compact SUV model and the production of tractors and trailers, as reasons to look for long-term.
Earlier this month, Tesla said total vehicle deliveries in the third quarter reached 83,500, a sharp increase from the previous year's 26,150 vehicles, thanks to sustained production of Model 3 this summer. He said he delivered 55,840 3s models in the period. The vehicle, whose price is lower than that of other Tesla models, is the cornerstone of Musk's commitment to transforming Tesla from a luxury niche brand into a manufacturer of mass vehicles.
Delays in meeting the production targets of Model 3 have increased the pressure on Tesla's limited cash supply, which has raised concerns among some suppliers about the automotive company's financial outlook.
Many analysts expect that Tesla will raise more money, in part to help boost their growth plans. But Mr. Musk has said he does not want to do it, saying that Model 3 will generate funds.
Investors will focus largely on Wednesday on Tesla's ability to generate cash and any guidance it has for the production of Model 3 in the fourth quarter.
The analysts surveyed on average expect Tesla to deliver 66,400 models 3 during the current period. The company has already said that 8,048 small sedans were in transit at the end of the third quarter and will be counted as deliveries in the fourth quarter, suggesting that analysts expect Tesla to build at least some 58,000 models 3 in the quarter.
Write to Tim Higgins in Tim.Higgins@WSJ.com
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