Why Investors Are Banking On Record Profits From Tesla Today

Tesla’s (TSLA) fourth quarter earnings report is just around this corner! This afternoon Elon Musk’s beloved electric car company will release its holiday period results. Investors are expecting all-time best profits and analysts have never set the bar higher.

Wall Street is forecasting that Tesla will earn 25 cents per share. That’s the most the Street has ever demanded from the company, but Tesla has topped that number once before. In the fourth quarter of last year the sell side consensus was 21 cents in EPS which Tesla knocked out of the park by reporting 33 cents. 

Contributing buy side and independent analysts on Estimize have much higher expectations heading into this report. Estimize contributors expect Tesla to break its own profit and sales records by reporting earnings of 40 cents per share and global revenue of $1.267 billion.

Tesla has beaten or matched the Wall Street consensus in each of the past 7 quarters, but that hasn’t always been enough to send the stock higher. Investors often expect companies to exceed the Street’s consensus because it has a tendency to be conservative. Estimize contributors are setting their expectations much higher than the Street’s view this afternoon. 

Back in November Tesla disappointed some fans by delaying the launch of its second vehicle, the Model X, until the third quarter of this year. Enthusiasts had hoped that production might start by the end of 2014 and that the crossovers would have been available this summer.

Tesla’s second car isn’t on the market yet, but to hold us over CEO Elon Musk unveiled the D in October. The D is a dual motor 4 wheel drive super version of the Model S which can do 0-60 miles per hour in a whirling 3.2 seconds. It’s also supposed to perform much better in the snow and in cold conditions, which may be a reason that hopeful investors are betting on Tesla today. 

However, a report published yesterday contained less optimistic news. According to Reuters Tesla sold just 120 cars in China last month. On January 13 Musk came out and said that sales in the world’s most populous country were “unexpectedly weak” during the fourth quarter. 

After the closing bell we’ll see if weakness in China was enough to deflate Tesla’s quarter or if the Model S and the D can work together to jolt the company above investors’ high demands.