Credit: Shutterstock photoTesla ( TSLA ) is set to report quarterly results after the market close Wednesday, with Wall Street analysts looking for answers on several topics of concern.
[ibd-display-video id=2462120 width=50 float=left autostart=true]
Perhaps the biggest question concerns the production ramp up of its new car, the Model 3 - Tesla's first car targeted at a mass audience. The Model 3 went into production in August but missed third-quarter production targets by a wide margin.
Tesla said it rolled out 220 Model 3 sedans in the third quarter but had planned to produce 1,500 in September alone.
"Not only does the miss undermine the credibility of future Model 3 targets, but it increases the near-term risks," wrote UBS analyst Colin Langan in a research note to clients on Monday. "Moreover, competing electric vehicles are coming, and a long delay could reduce Tesla's market share opportunity."
Langan has a sell rating on Tesla and price target of 185.
JPMorgan analyst Ryan Brinkman last week slashed his fourth-quarter Model 3 delivery estimate to 15,000 cars from 30,000, "given the slower-than-expected progress in ramping the vehicle in the third quarter," he wrote in a research note to clients.
Tesla will report third-quarter results after the market close Wednesday, with investors wanting to know if the maker of all-electric vehicles has worked out the kinks in Model 3 production. The consensus estimate is for revenue of $2.9 billion, up 26% from the year-ago period. The consensus on adjusted earnings, as polled by Zacks Investment Research, is a loss of $2.45 a share, vs. a profit of 71 cents a year ago.
Tesla recently said that reservations for the Model 3 have grown to more than 500,000, up from the 373,000 that Tesla previously reported in the spring of 2016.
Tesla shares are down about 18% from its record high of 389.61 set on Sept. 18, due to concerns about Model 3 production, workforce restructuring and concerns that Tesla's development of self-driving cars is sputtering. Tesla shares climbed 3.6% to close at 331.53 on the stock market today .
IBD'S TAKE:Tesla has a weak IBD Composite Rating of 46 out of a possible 99 and is trading below its 50-day moving average . Check out IBD'sTech Leadersfeature to get a broader idea on top tech stocks
"Investors are anticipating a weak third-quarter report," wrote Nomura analyst Romit Shah in a research note to clients Tuesday. Shah maintained a buy rating on Tesla and price target of 500.
"Though results will likely miss expectations, we remain positive on Tesla's shares, believing that deliveries, margins and cash flow will bottom in the third quarter and inflect higher over the next several periods," Shah wrote.
Tesla has targeted production of 5,000 vehicles per week by the end of this year, "which we see as increasingly unlikely, particularly given recent supply chain reports," Shah wrote.
Tesla has said it plans on increasing Model 3 production to 10,000 vehicles per week at some point in 2018. Tesla also said it expects Model S and Model X deliveries to increase in the second half of this year, vs. the first half.
"We expect Tesla to stand by longer-term production targets," Shah wrote.
Among other issues that investors want more detail on is Tesla's autonomous driving capabilities, as the company has missed a number of software deadlines following its 2016 split with Mobileye, now owned by Intel ( INTC ). Tesla is also expected to address recent reports regarding a potential manufacturing agreement with China.
They'll also want more information on recent layoffs. Tesla laid off an estimated 400 to 700 workers in mid-October.
Tesla beat the consensus estimate on revenue and earnings when it reported second-quarter earnings three months ago.
RELATED:
Musk's Latest Venture: Tunnel Through L.A.'s Traffic Problems
Bullish Tesla Report Forecasts Huge Growth Due From Model 3
Tesla Model 3 Prices, Features; Musk Sees 6 Months Of 'Production Hell'
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
