Investors planning to play the earnings report from Tesla Motors Inc (NASDAQ:TSLA) are brave. The company’s current valuation means that it has a lot more downside than it has upside, and the stock leaped on today’s market. There are multiple metrics that company could miss on that would send the stock into a tailspin tomorrow afternoon.
A new report on Tesla Motors Inc (NASDAQ:TSLA), from Baird analyst Ben Kallo, sums up the dangers of betting on tomorrow’s report. “We think the stock is currently priced for a flawless quarter,” Kallo writes in his preview of the company’s third quarter earnings report. There’s a huge amount of expectation priced into the company’s stock, and it could play hell with the value of the firm after earnings are released.
Tesla is priced on speculative auto sales numbers reaching far into the future. In order to track the company’s success analysts are using several different metrics to value the company. According to Baird the important information this time around will be the company’s vehicle deliveries, Model X production schedule, and gross margin as well as the headline numbers.
Other important news will be the progress of the Supercharger network rollout and demand from Europe and Asia. Tesla Motors Inc (NASDAQ:TSLA) will need to hit home on all of the major numbers in order to pacify a market that values it astronomically.
The Baird analysts are looking for earnings per share of 4 cents and revenue of $547.9 million from tomorrow’s earnings report. Gross margins are expected to come in at 22.2%.
Tesla stock drop
Many investors in the company would argue that the recent fall in the value of Tesla Motors Inc (NASDAQ:TSLA) means there is a certain amount of upside heading into tomorrow’s earnings report. Today’s 8% recovery has wiped out most of that upside, and the downside could be far, far worse.
The Tesla Motors Inc (NASDAQ:TSLA) earnings report will arrive at around 4:30 PM EST on Tuesday. The release will strain the nerves of the company’s investors, and it may lose them a large amount of money. Playing earnings with a company valued on expectations is dangerous, and investors should know what they’re getting into before they lay down cash.