Tesla earnings: 3 things to watch
Tesla’s long, difficult drive toward profitability will be in full focus on Wednesday when the electric-car maker announces third quarter earnings on short notice.
Long regarded as one of the most-shorted stocks on U.S. markets amid concerns about CEO Elon Musk’s antics and the Model 3 ramp-up, recent indications of success caused at least one prominent Tesla critic to reverse course. Citron Research, which had held a short position, reversed its opinion on the company‘s shares to Long just one month after it sued Tesla and Musk for allegedly manufacturing a take-private plan to burn short-sellers.
“Citron is long Tesla as the Model 3 is a proven hit and many of the [Tesla] warning signs have proven not to be significant,” the company said in a research note, adding that the electric-car maker is “destroying the competition.
Tesla shares rose more than 5 percent in trading Tuesday on Citron’s reversal.
The company surprised Wall Street by revealing Monday night that it would announce third-quarter earnings this week, about one week ahead of its historical schedule. Tesla confirmed earlier this month that it produced a company record 80,000 vehicles in the third quarter, including more than 53,000 Model 3 sedans – the flagship model seen as a bellwether for its long-term prospects.
Here’s a look at key factors to watch when Tesla reports at 6:30 p.m. ET.
Will Tesla be profitable?
Tesla has not turned a profit since 2013, spending aggressively to fund the development and production of key vehicles such as the Model 3. However, Musk has repeatedly said that Tesla is on track to achieve profitability and positive free cash flow by the second half of 2018.
As Tesla made its final push to boost production figures this quarter, Musk told employees in a Sept. 30 email that profitability was within reach.
“We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday),” Musk wrote at the time. “If we go all out tomorrow, we will achieve an epic victory beyond all expectations.”
Elon Musk’s SEC battle
Tesla’s third-quarter report will be the company’s first since Musk reached a settlement with the SEC that required him to step down as company chairman and pay a hefty fine. Federal officials had charged Musk with fraud in connection with his tweet last August that he had “funding secured” to take Tesla private.
When the funding never materialized, Tesla abandoned the plan and faced allegations that it had concocted the announcement to burn short-sellers. Even after the settlement, Musk has repeatedly mocked the SEC on Twitter.
What’s next?
With the Model 3 rollout well underway and showing signs of success, Tesla is expected to provide updates on other initiatives, according to the Teslarati blog. The company is in the process of developing a new factory in Shanghai, as well as new vehicle models.