Tesla Inc (TSLA) stock jumped to yet another new record early Tuesday before pulling back after touching $327.66. As of this writing, Tesla stock is in the red for the day despite setting a new record high early in the session. The company is set to release its next earnings report on Wednesday after closing bell, and investors have already reacted to the delivery surprise, as the company always releases an estimate within a few days of the quarter’s end.

So is there anything left in Wednesday’s earnings release to drive Tesla Inc (TSLA) stock?

Tesla stock earnings TSLA
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What to watch for in Tesla’s earnings report

Consensus estimates for Tesla Inc (TSLA)’s first quarter suggest GAAP losses of $1.15 per share and non-GAAP losses of 83 cents per share, compared to the year-ago quarter’s GAAP loss of $2.13 per share and non-GAAP loss of 57 cents per share. Wall Street is expecting $2.6 billion in sales, compared to $1.6 billion in last year’s first quarter.

Tesla Inc (TSLA) said it delivered more than 25,000 vehicles during the first quarter, which was better than what most of Wall Street had been expecting. Baird analyst Ben Kallo said in his April 27 note that the first quarter earnings release should remove an overhang on Tesla Inc (TSLA) stock and enable investors to focus even more on the Model 3 than what many are already doing.

Automotive gross margins will also be in focus, and Bernstein analysts believe they should have increased “materially” in the first quarter because of the Autopilot software pushout from the fourth quarter. However, Autopilot 2.0’s full functionality wasn’t yet available during the first quarter, and Kallo warned that this could have delayed recognition of that revenue and thus will impact the margin. He noted that the fourth quarter gross margin was negatively impacted by a delay in revenue recognition for Autopilot, and he feels that this could keep happening.

Tesla stock is pricing in some big challenges

UBS analyst Colin Langan, who is firmly entrenched in the bear camp when it comes to Tesla Inc (TSLA) stock, said in his May 1 earnings preview note that the company’s “lofty valuation leaves little room for error.” He noted that Tesla Inc (TSLA) stock is up by about 50% year to date and estimates that the shares are pricing in sales of about 2 million vehicles a year in ten years. This would bring the company in line with where BMW is today and close to Mercedes, which ships about 2.4 million vehicles annually.

He also estimates that the current value of Tesla Inc (TSLA) stock assumes achievement of the company’s mid-teens operating target with just 3% annual dilution and the ability to keep trading at 25 times earnings a decade from now. He also explained why all of these assumptions are big challenges and notes that all major luxury automakers are planning to launch new EVs between 2018 and 2020.

Bernstein analysts predicted in their April 27 note that Tesla Inc (TSLA) stock would remain range-bound for some time, possibly until it becomes clear that the company can deliver profits on the Model 3. He doesn’t expect that until at least another year.

Warnings about cash burn and the Model 3

Another area of likely focus tonight is cash burn, and Langan is estimating $1.2 billion in cash burn for the first quarter, marking an acceleration from the fourth quarter’s $800 million. He explained that the higher capital expenditures of $1.25 billion likely drove the significant cash burn, given that the company only spent $520 million on capex during the fourth quarter.

He also warned that investors will probably have a strong reaction to any changes or updates to timing related to the Model 3, which is scheduled to go into production in the beginning of July. Kallo said that the Model 3 launch should remove an overhang on Tesla Inc (TSLA) stock, so if production begins on time, this should be the last earnings report before deliveries begin.

Aside from the standard concerns about a delay in the Model 3, given the company’s frequent delays with previous vehicles, there is a new concern regarding the production timeline. Tesla Inc (TSLA) has apparently decided to skip the beta prototype phase in order to meet its deadline, which is causing many to worry that the earliest cars to come off the line will be essentially lemons on wheels.

Shares of Tesla Inc (TSLA) stock declined by as much as 1.41% to $318.29 during regular trading hours on Tuesday.