Tesla Motors Inc, SolarCity Corp Shares Tank Despite Solid Q3

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Tesla Motors Inc (NASDAQ:TSLA) posted third-quarter earnings of 12 cents per share, which was above the analysts’ expectations of 11 cents per share. A majority of the analysts are positive on the stock despite a drop in the share price after the earnings release. They added that Tesla is facing a high-class challenge, and its supply is lagging behind its demand.Tesla Motors Inc, SolarCity Corp Shares Tank Despite Solid Q3

Analysts’ views on Tesla

According to Jefferies analyst Elaine Kwei, third quarter results from Tesla outpaced the consensus revenue and non-GAAP EPS, delivering more than 5,500 vehicles. The report added that over-expectation with the company might be the reason of disappointment,” but the third quarter was yet another significant quarter for Tesla Motors Inc (NASDAQ:TSLA) owing to rising volumes of the Model S.

Similarly, analyst Adam Jonas at Morgan Stanley said that Tesla Motors Inc (NASDAQ:TSLA) has posted solid third quarter results that will work in favor of bulls’ thesis of America’s Fourth Automaker,’ but it was not strong enough to get a consensus upgrade in the near term.

In a separate report, S&P Capital IQ analyst Efraim Levy assigned Tesla a Sell rating and has lowered the EPS estimate primarily due to higher research and selling, and general and administrative expenses expected to be incurred in the fourth quarter.

Solar City had strong numbers, but shares down

SolarCity Corp (NASDAQ:SCTY) also posted third quarter earnings beating Wall Street expectations, but falling short of the bottom line targets. The company posted adjusted loss per share of $0.43 on approximately $49 million of sales compared to analysts’ estimate of non-GAAP net loss of $0.38 per share on sales around $41 million.

Cash flow of SolarCity was strong at $100 million, which was almost three times that of the corresponding quarter of previous fiscal. Capital expenditure also increased twofold to $217 million while free cash flow was strongly negative.

SolarCity Corp (NASDAQ:SCTY) provides solar panels free to customers, and recovers the cost later through long-term lease contracts, which in turn increases the capital expenses and the long-term contracts. The estimated nominal contract payments was $500 million in 2011, $1 billion in 2012, and $1.7 billion right now. Investors ignored the solid revenue of the panel maker, and focused on the grim profitability of the company and as a result shares dropped around 10% in after-hours trading yesterday.

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