Tesla is about to report earnings — here’s what to expect

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Tesla

  • Tesla will report Q4 and full-year 2017 earnings on Wednesday after the markets close.
  • Analysts are expecting a big loss as the company’s cash burn continues to be intense.
  • Tesla has struggled to produce its Model 3 mass-market vehicle.

Tesla’s stock went on a tear in 2017.

The company’s market cap is about $60 billion and CEO Elon Musk just got a new pay package that guides the company to a $650-billion market cap. But Tesla’s Q4 loss could be $3.75 per share, or more, with a full year loss of nearly $10 a share. There has even been some chatter that the quarterly loss could be a billion bucks.

For contrast, General Motors, with a nearly equivalent market cap, reported on Tuesday that it made $6.62 per share on an adjusted basis in 2017, with revenue of $146 billion. For the year, GM made more four times as much – $13 billion – as Tesla currently has cash in the bank.

Even with the market decline of the past few weeks, Tesla’s stock price is still up in 2018, despite the troubled and delayed rollout of the all-important Model 3 sedan (the beginnings of full production were pushed back to June).

Prior to the market correction, which has reduced Tesla’s 2018 gain to about 3% ahead of earnings, there was no real major dip, so you could argue that the staggering losses and the capital obliteration – over $1 billion per quarter at his point – are, well, somehow rationally priced in. Somehow.

A surreal conference call is coming

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Andy Kiersz

In the context of Musk’s new compensation deal, the conference call with analysts to discuss the results should be surreal. Also, Musk will be fresh off the launch of the Falcon Heavy rocket on Tuesday, if all goes according to plan. If it doesn’t explode, he will be riding quite a high.

Analysts will want some insight into whether Tesla has mistimed any new capital raises, given what’s happening with stocks at the moment. That said, the carmaker did undertake a sale of bonds tied to its leasing portfolio, raising over $500 million, so the company is exploring ways of bringing in cash that don’t involve equity or debt.

Some analysts might want better guidance on deliveries for Model 3, but Tesla has already kicked that can down the road, to mid-2018. Model S and X demand could also be of interest, given that Tesla appears to have topped out production of these vehicles at about 100,000 annually.

Finally, investors will be interested in Musk’s comments about new products, such as the recently revealed Tesla Semi and next-generation Roadster, as well coming launches for a pickup truck and a compact SUV, the Model Y.