Market Overview

Earnings Preview: Tesla Hoping to Retain its Drive

Tesla Motors (NASDAQ: TSLA) is set to report its latest earnings after the closing bell on Wednesday. Wall Street analysts have consensus earnings per share estimates of -$0.62 for the company. Estimates taken from Estimize.com are more bullish at -$0.52.

Estimize is a unique new tool which allows traders and investors to get a better idea of what the "whisper number," or real earnings expectations are for a company. The site does this by aggregating estimates from its users and generating a consensus EPS estimate based on this data.

Frequently, the "whisper number" is a better gauge of likely sentiment after the earnings numbers are released compared to Wall Street estimates which have a tendency to be on the conservative side. It is not uncommon to see a stock trade off sharply despite beating Street estimates if the numbers come up short of the whisper estimates.

On Friday, analysts for Dougherty & Company reported that they had attended the unveiling of Tesla's new Model X vehicle, saying that, “Over the course of three factory tours in the past 10 months, we've witnessed the Tesla Factory in Fremont evolve from nearly empty to 95% complete. Since our October research note, the factory has started processing actual Model S beta parts. Tesla has continued to install robots and assembly line transition points. Many of the robots remain in “teach” mode, meaning they are still learning the exact assembly process.”

The Company
The California-based company designs and manufactures electric vehicles and components. It also produces its own commercial electric vehicle, the Tesla Roadster. That car offers performance that can rival gas and diesel cars, without any of the emissions. As such, it is one of the leaders in electric vehicle manufacture in the U.S.

Competitors include General Motors (NYSE: GM), Ford (MYSE: F) and Honda (NYSE: HMC), all of whom are looking to get ahead in the electric vehicle market.

Performance
The third quarter saw Tesla's loss widen $65.1 million (63 cents a share) from a loss of $34.9 million (38 cents) the previous year, yet it beat analyst expectations. Revenue rose 84.6% to $57.7 million from $31.2 million.

Between January 11, 2012 and February 9, 2012, Tesla's stock price rose $4.35 (15.4%), from $28.23 to $32.58. It then went on to see one of its best stretches between February 23, 2011 and March 4, 2011, with shares increasing 14.3% (+$3.12) over an eight day span. Between August 12, 2011 and August 22, 2011, it did not fare so well, with shares falling for seven straight days, dropping 16.6% (-$4.36) over that span.

Dougherty & Co. says that Tesla's future profitability depends upon achieving 43% net cost reduction from the Roadster to the Model S. Failure to achieve cost reduction objectives would be detrimental to the company and the stock.

Posted-In: Earnings News Best of Benzinga

 

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