Tesla Explodes Higher As Company Reports Blowout EPS, Even As CapEx Disappoints Again

Three months ago, the main question for Tesla’s (TSLA) second quarter results was whether the electric-car maker was on a stable path to finally turn profitable. The answer, at the time, was not as Tesla not only missed on the top and bottom line, but the company slashed its capex outlook, suggesting that its vision for the growth future has become far more cloudy. It also sent the company's stock tumbling.

Fast forward to today, when looking at Tesla's Q3 earnings the question for investors will again be more or less the same: will Tesla finally be able to turn a profit in a quarter in which Tesla delivered a record number of vehicles (yet coming light of expectations) with focus increasingly shifting to whether the company can sell cars profitably?

Tesla's margins have come under pressure in recent quarters, as the carmaker has been selling more lower priced, lower margin Model 3 sedans compared with the older Model S and Model X. A further squeeze could also come from rising battery prices, according to Roth Capital Partners analyst Craig Irwin. As a result, the average analyst estimate for Q3 gross margin had fallen sharply after the second quarter, and is down 27% over the past year.

Separately, revenue estimates suggest the company's top line will fall compared with last year, the first such drop for Tesla since 2012 when the Model S started production.

Another key metric will be cash flow with analysts expecting free cash flow to drop to $35.9 million for the period, which according to Bloomberg Intelligence is "The single most important number to track... Paying the bills, supporting global expansion and servicing the debt are the bottom line necessities. Almost all of the other metrics are just noise."

Also under the microscope will be Tesla's guidance - Musk has said he expects to deliver 360,000 to 400,000 vehicles in 2019, although many analysts believe it will be tough for the company to reach these numbers.

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So with all that in mind, here are the main numbers that Tesla reported for the third quarter, bizarrely in a totally different format to Elon Musk's previous investor letter, one which this time was not signed by Musk as is customary:

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Nicholas Charles Cox 5 months ago Contributor's comment

This is a typically bearish article on Tesla which we see on sites such as this and Seeking Alpha.There are many writers out there who either have a short position on Tesla which is killing them, or who are financed by fossil fuel entities because Tesla is a feared disrupter.

Tesla continues to disappoint the FUD's by put-performing from analyst's estimates.It would be a reckless investor who shorts Tesla now.

Mike Nolan 5 months ago Member's comment

#Tesla has many obstacles and challenges to overcome. Anyone who denies that isn't willing to face reality. That being said, too many short sellers underestimate the company's loyal fan base. I wonder how many of them have ever driven a Tesla. There's simply no other car out there like it. Just like #Apple's fans got them through the hard times, so will Tesla's. %TSLA $AAPL