Tesla, Inc. Earnings: What to Watch

By Daniel Sparks Markets Fool.com

For Tesla's (NASDAQ: TSLA) first quarter, one of the electric-car company's most closely watched metrics has already been released: Tesla delivered just over 25,000 vehicles during the quarter, up 69% year over year. But there's still plenty investors would like to know when Tesla reports quarterly results on Wednesday, May 3.

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You can bet investors will be watching the quarter closely. Tesla stock has been on a tear recently, surging more than 50% in the past six months to new all-time highs as investors begin to give more weight to the company's upcoming launch of its first lower-priced, mass-market vehicle: Model 3.

Model 3. Image source: Tesla.

Ahead of Tesla's first-quarter earnings release, here are three areas for investors to watch.

Model 3 news

One of the hottest topics going into Tesla's first-quarter earnings release is undoubtedly anything management says about Model 3. With the comapny planning to launch the vehicle in July, investors should look to see if management provides updates on what to expect from the vehicle itself, as well as from Tesla's production plans for the vehicle.

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The Model 3 is critical to Tesla's plans to grow its business. Management expects the Model 3's lower price compared to its current vehicles to help Tesla increase its annualized production from a rate of about 100,000 units today to 500,000 units next year. Further, Tesla has said it expects the Model 3 program to see "limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018."

Capital expenditures

Of course, Tesla's Model 3 expansion won't be cheap. This is why investors should check in on the company's capital expenditures for the quarter, as well as any guidance management provides for the rest of the year.

Thanks to the capital-intensive nature of building vehicles, management said in its fourth-quarter shareholder letter that it expected capital expenditures to skyrocket during the first half of 2017. Management forecasted capital expenditures of $2 billion to $2.5 billion during this period, a big jump from Tesla's $1.3 billion in capital expenditures during the entire year of 2016.

Demand

Another interesting area to watch will be any commentary on demand for Tesla's vehicles.

While Model X deliveries are still rising sharply each quarter, Model S deliveries peaked in the fourth quarter of 2015. Will recent price reductions to the starting prices of Model S help the sedan's sales move higher again? Further, while deliveries for Model X have continued to grow each quarter, are orders for SUV still increasing?

Data sources: Tesla's quarterly SEC filings and vehicle delivery updates. Chart by author.

Tesla typically shares updates on the trajectory of orders for its Model S and X in its quarterly updates. So, investors can look to this figure to get some insight into how demand for the two vehicles is panning out ahead of Model 3's launch.

As far as getting an update on demand for Model 3, investors shouldn't count on it. Ever since Tesla generated about 400,000 deposit-backed reservations for the vehicle within about a month and a half of its unveiling, Tesla hasn't provided investors with a new figure.

Tesla will release its first-quarter results after market close on Wednesday. In addition, the company will also host a live conference call to discuss the quarter at 2:30 p.m. PDT. Stay tuned at The Motley Fool for analysis of Tesla's first quarter after the update is posted.

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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.