Shares of Tesla Motors Inc TSLA recouped pre-market losses and gained 5 percent, as the automaker is expected to announce a profit when it reports its fourth-quarter financial results on February 10, and investors are pinning their hopes on Model 3 – the company's car for the mass market.
Wall Street expects the company report a profit of 8 cents a share, compared to a loss of 13 cents a share last year. Quarterly revenue is estimated to grow 63.6 percent to $1.79 billion.
In the past four quarters, Tesla managed to top Street estimates twice and missed them on two occasions. But, the most worrying sign is the steep fall in analysts' average earnings estimate to 8 cents a share from 21 cents a share during the past 90 days.
The Bears Are Back
The bearish trend indicates that the analysts are becoming more skeptical over the demand for Tesla vehicles amid the $30 oil prices, and production issues surrounding Model X. Unlike bigger rivals, a small company like Tesla can't afford to have production hiccups.
In January, Tesla said it delivered 17,192 Model S vehicles and 208 Model X vehicles in the fourth quarter. The Q4 Model S deliveries were about 48 percent more than its prior quarterly record and approximately 75 percent more from last year.
The company said Model X deliveries are in line with the very early stages of Model X production ramp. Tesla noted that the daily production rate in the last week of the year tracking to production of 238 Model X vehicles per week.
Investors And The Street Await The Earnings Call
The Street and investors alike are eagerly waiting for Tesla to give more updates on the Model 3, the company's $35,000 mass-market vehicle which will compete with Chevy Bolt. CEO Elon Musk is betting big on the Gigafactory and the Model 3 to make electric cars a viable alternative against gasoline vehicles. The Model 3 is expected to be released in late 2017.
Investors will also watch for further updates on the company's new technology called Summon, which allows cars to park themselves at home.
Tesla came to the limelight when other electric carmakers have struggled to sustain in the new market and oil prices were high. The company's upcoming Model 3 vehicle is widely believed to decide the future course of the electric car industry.
Shares of Tesla, once the darling of investors, have dropped 37 percent this year, while the S&P 500 have declined 10 percent. Tesla touched a 52-week low on Tuesday when Barclays cut its price-target to $165 from $180.
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