Get ready for an earful when electric-car maker Tesla Motors (TSLA) reports Q2 earnings after the bell on Wednesday. We’re listening for how well deliveries of its $100,000 Model S are wrapping up, whether the roll-out date for its new sport-utility car will change, and whether China’s economic and stock woes are denting TSLA’s full-year revenue outlook.
These details matter because some market bulls are looking for Tesla to crash through profit and sales expectations. After all, it’s done just that in seven of the last eight quarters. This quarter, like the year-ago period, Tesla is expected to fall into the red and turn in an adjusted loss of $0.60 cents a share but on far greater revenues of $1.17 billion than last year’s $769.35 million. It made an adjusted profit of $0.11 a share then.
The revenue figure becomes the must-watch number as has been the case for many companies this earnings period. That's especially true for TSLA given its expected quarterly loss.
We’re also looking for some insight on the first deliveries of the new SUV they’re calling Model X. The on again-off again launch could be a big blow to 2015 delivery goals if this September takeoff doesn’t happen and today could be the day we find out.
That too will likely impact Q3 and Q4, which are critical to Tesla’s credibility of meeting delivery expectations.
Tesla’s stock is up roughly 7% on a year-over-year basis but higher by a whopping 44% from its 52-week low in March (figure 1). It has outpaced the low single-digit gains of the S&P 500 (SPX) in the process. Bulls will argue that’s a pretty good showing considering its weak earnings and the spending binge for buildings, engineering, and people over the last year.
Much of the stock reaction after earnings could be tied to how much cash the company—still considered a startup—is burning through, which we already know is a lot.
Tesla's call option volume on Tuesday was almost double its put volume, especially in the weekly contract. Higher-volume buying action in the near-term 290 and 280 calls likely reflects short-term positioning by some traders for an upside move around earnings.
As of Wednesday morning, short-term options activity shows traders have priced in a nearly 7.5% move in either direction for the underlying shares around the earnings release.