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Tesla Earnings Will Be A Clue For Long-Term Future

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The electric car manufacturer Tesla Motors Inc (NASDAQ:TSLA) has had a pretty spectacular twelve months. Having been one of the most regularly short sold stocks just a couple of years ago, the motor firm has turned its business model around completely in that time to become an very important manufacturer within this ever competitive sector. Few people believed that it was possible for a car manufacturer in the United States to compete with the so-called ‘Detroit Three’ of General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), and Chrysler, but Tesla has shook off such negative predictions.

Tesla sales doubled

Thus, despite many city analysts pegging them for imminent doom, Tesla has established itself as a highly promising company for the future in the last year. Its share price during that time has performed spectacularly. Even in the last three months, the company’s value has virtually doubled on the back of encouraging news regarding sales and Tesla’s long-term East Asian strategy.


While over the last twelve months, Tesla Motors Inc (NASDAQ:TSLA)’s share price has increased over five-fold.


Tesla Motors Inc (NASDAQ:TSLA)’s success is clearly indicative of a genuine enthusiasm for the electric car. It seems like a no-brainer; why wouldn’t you want a vehicle that doesn’t require any expense to fuel? But image and logistical factors have previously played a big part in the floundering of electric vehicles, and Tesla had a lot to do to convince markets of its long-term worth. It seems that with its evolving and expanding network of charging centers, the impressive, popular and well-received Model S vehicle, and coherent growth model centered around the Chinese market that Tesla’s future looks extremely bright indeed.

Audi’s Q8 a serious rival for Tesla Model S

However, once the big boys realize that the electric car market offers them serious opportunities, and indeed is a threat to their existing business model, then naturally they are going to wade in. Already, Audi’s Q8 is predicted to be a serious rival for Tesla’s hugely successful Model S. And with the forthcoming Tesla Model X delayed and seemingly not to be released in the immediate future, the company will already be well aware that it faces some tough long-term challenges.

But that’s all in the future. What sort of figures can we expect from Tesla tomorrow when its latest earnings information is released? Well, before any further information is gleaned, the city was already enthusiastic on Tesla’s prospects today purely on the basis of some huge breaking news for the company. It has emerged – at a rather convenient time! – that Tesla Motors Inc (NASDAQ:TSLA)’s CEO met with Apple’s acquisition chief Adrian Perica last spring. While neither company will confirm what the motivation behind this meeting was, just being associated with Apple is good for any company’s prospects. Consequently, Tesla’s share price has shot up another three percent today.


Aside from the Apple Inc. (NASDAQ:AAPL) collaboration, Tesla has revealed previously that its fourth quarter earnings in 2013 were 20% higher than expected. Tesla managed to sell and deliver nearly 7,000 vehicles during this quarter, its highest ever sales figure for a three month period. Furthermore, market sentiment towards its vehicles has been very positive, and the company has made significant strides into improving its supercharger network. Thus, the general mood before Tesla’s report is pretty positive.

Tesla earnings preview

It seems likely based on these factors that Tesla Motors Inc (NASDAQ:TSLA) will release strong figures to the markets tomorrow, and we may see the markets responding very positively in the short-term to its financial figures. Analysts are thus predicting that Tesla will both exceed its predicted sales figures and increase its share price and market value by another 10-12 percent in the near future. Analysts polled by Thomson Reuters believe that Tesla’s revenue for the quarter will come it at around $663.3 million, approximately 7.5 percent higher than was predicted.

But whether the company can keep up its impressive momentum in the longer-term remains to be seen. The release of the long awaited, and frequently delayed, Model X would be a particular boon for Tesla, or at the very least the ability to release some concrete information on when it can be expected. Right now, longer term investors are not so much focused on profitability concerns with regard to Tesla, as the company has shown that it can deliver on this front, but rather on whether it can continue to grow its margin and revenue and increase sales and production volume. While the Model S is holding up remarkably well, with imminent competition on the horizon Tesla cannot rest on its laurels indefinitely.

Tesla Motors Inc (NASDAQ:TSLA) has stated publicly ahead of the results that it is currently working on addressing its production constraints, with the manufacturer notably struggling to satisfy US order while also exporting vehicles to emerging markets for the company in Europe and East Asia. If the company can balance its short-term requirements against the need to expand its product range and exploit new markets, then the last twelve months may be only the beginning of a longer lasting success story.

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Christopher Morris

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