Tesla Motors Inc Q1 Earnings: Will It Surprise Again?

Tesla Motors Inc Q1 Earnings: Will It Surprise Again?
<a href="https://pixabay.com/users/Blomst/">Blomst</a> / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) reports its fiscal first quarter results on Wednesday, May 7 after the bell. The electric vehicle maker delivered a +250% earnings surprise during the fourth quarter of 2013. So, a big question is, “Will Tesla give a positive surprise again?” Analysts polled by Thomson Reuters expect the company to report revenue of $699.10 million and earnings of 10 cents per share. The San Francisco-based company had earned 12 cents on revenues of $561.79 million in the same quarter a year earlier. For FY2014, analysts forecast $1.78 in EPS and $3.65 billion in revenues.

Tesla’s operating expenses likely to jump 15%

Tesla Motors Inc (NASDAQ:TSLA) forecasts its vehicle deliveries to fall from 6,892 units in Q4 to 6,400 units in the March quarter. The decline doesn’t reflect any weakness in demand. It’s mainly because of an increased number of vehicles in transit to Asia and Europe, where Tesla is trying to reduce the bottleneck. The Elon Musk-led company’s operating expenses are expected to jump 15% as Tesla continues to expand its Supercharger network and international presence. The Model S sedan maker also expects its R&D expenses to increase, given the design and development work on Model X. Investors expect Tesla Motors Inc (NASDAQ:TSLA) to outline its plans to expand the Supercharger network in China, and build a manufacturing unit in the world’s most populous country. Chinese government aims to bring at least 5 million electric vehicles on roads by 2020. The company’s plans to produce vehicle will bring down the Model S price tag of $122,000, and Tesla will be eligible for government incentives offered to domestic companies.

Is Tesla Model X on schedule?

Investors will also be looking for commentary on Tesla Motors Inc (NASDAQ:TSLA)’s second production line. The electric vehicle company plans to increase its manufacturing pace from 600 units per week to 1,000 units by the end of this year. The second production line is expected to become operational by the end of Q3, 2014. The company is also expected to provide more details about the Model X crossover, which is likely to hit the markets in early 2015. Investors would want to know if Model X remains on schedule. Any further delay in the Model X launch will be a red flag. Tesla Motors Inc (NASDAQ:TSLA) has to improve its gross margins to above 25% in the first quarter. Gross margins stood at 24.9% in Q4 and 17.4% in Q1 of 2013. The company has stated that it can achieve the 28% gross margin by the end of 2014. Achieving that milestone will be an uphill task if Tesla reports a flat or lower margin compared to Q4. Tesla Motors Inc (NASDAQ:TSLA) shares inched up 0.83% to $209 in pre-market trading Wednesday.

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