Tesla Motors Inc (TSLA) Earnings: What To Look For

Tesla Motors Inc (TSLA) Earnings: What To Look For
<a href="https://pixabay.com/users/Blomst/">Blomst</a> / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) is scheduled to release earnings tomorrow, and this is certainly one report analysts and investors will be watching closely. Most analysts are looking for very specific items in addition to the standard numbers, like an update on the gigafactory and more details about Tesla’s progress in China.

Why might Tesla stock move higher after earnings?

In a report dated July 28, 2014, Stifel analyst James J. Albertine said he expects Tesla Motors to report units that are in line with guidance. He believes that if there isn’t a “significant move / news” before the second quarter earnings release, in-line results will be “good enough” to push the stock higher.

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The analyst is currently maintaining his second quarter earnings per share estimate of 6 cents, which is higher than the consensus estimate of 4 cents. He based that number on deliveries of 7,500 Model S sedans and his expectation of an automotive gross margin of 25.8%. He has also maintained his longer-term growth assumptions for units based on the beginning of Model X deliveries in Spring 2015 and Generation III deliveries beginning in the 2017 fiscal year.

Albertine is looking for an average transaction price of $108,000 for the quarter, which is slightly higher than the $106,000 average in the previous quarter. The main driver of that estimate is increased international demand, which he thinks will result in a higher penetration of the more expensive models with better trim and 85 kWh batteries.

He adds that ramping costs for research and development due to the ramp of production for the Model X, development of the Model 3 and investment in the gigafactory could lead to “choppy” results for the next several quarters.

What to watch for in Tesla Motors’ earnings

Albertine said he’s looking for updates on the gigafactory and also the automaker’s international rollout. Specifically on the international front, he expects Tesla to emphasize the number of deliveries in China.

On the gigafactory, he hopes to hear more about Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752)’s involvement in the facility. He also wants to hear updates on the location, the ramp-up in capacity and the potential need for a second factory after Tesla’s updated outlook on demand. In addition, he wants to hear more about the automaker’s planned downtime and also the production and delivery schedule for the Model X.

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