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TSLA Earnings: Cars, SolarCity and Gigafactory—Update after the Bell

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February 22, 2017
Earnings report for Tesla and financial outlook.
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Electric-car buffs and industry analysts are likely to be revved up for the quarterly results from Tesla (TSLA), the Silicon Valley-based luxury electric carmaker. TSLA reports Q4 results after the bell today.

The release is expected to offer a rundown of the company’s auto production, its integration of recently-acquired SolarCity and the progress of Gigafactory, its new battery cell production facility.

Some analysts will likely be looking for a status update on the Model 3, which carries a starting price of $35,000. Chief Executive Elon Musk has said a number of times that TSLA will be producing 500,000 units of the car by 2018. Production was slated to begin mid-2017, according to the company, with delivery dates a year or more later.

A TSLA spokesman told Reuters earlier this month that there would be a “’brief, planned” pause of production at its California assembly plant, in order to test Model 3 production. Sources told the news agency, and others, that production of the sedan at its Fremont, Calif., factory was scheduled to begin Feb. 20.

As for Q4, some analysts say they’re interested in deliveries on other TSLA products like the Model X and Model S. TSLA said last month that it had produced 24,882 vehicles in Q4, but only delivered about 22,200, most of which were the Model S. That fell short of TSLA’s Q3 forecast of just over 25,000 vehicles in Q4. “Short-term production challenges” were to blame, TSLA said. For the year, TSLA said it produced 83,922 vehicles, a 64% increase over 2015’s production total.

In Q4, TSLA closed on its purchase of SolarCity, the largest provider of residential solar-power systems in the U.S., and some analysts wonder if the transaction has been additive to TSLA’s cash balance, as the company forecast. TSLA has said, too, that SolarCity is projected to contribute $1 billion-plus in revenue to its balance sheet this year, and many analysts might be interested in knowing if that is still on track.

And what about the race to get self-driving cars on the street? Some analysts say they will be listening for an update on its autonomous vehicle program. TSLA, which is facing competition from the likes of Alphabet’s (GOOG) Waymo division and Uber, as well as traditional carmakers like Ford (F), General Motors (GM), and BMW (BMW), tested four driverless cars on California streets last year, as did its competitors.

The consensus revenue estimate from third-party Wall Street analysts is $2.20 billion, above the $1.75 billion reported a year ago, according to the Earnings Analysis* tab on the thinkorswim® platform from TD Ameritrade. On a per-share basis, TSLA is expected to lose $0.13 compared with a loss of $0.87 a year ago. In Q3, analysts were forecasting TSLA to report a loss of $0.54 a share but the carmaker surprised by posting a profit of $0.71 a share.

The options market has priced in an expected share price move of just over 6% in either direction around the earnings release, according to the Market Maker Move™ indicator on the thinkorswim® platform.

Call options trading has been heaviest at the weekly 300 strike while puts have been active at the 270 strike. The implied volatility sits at the 41st percentile. (Please remember past performance is no guarantee of future results.)

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

TSLA, 12m

FIGURE 1: DRIVING TO HIGHER GROUND.

TSLA shares have been on a steady upward trajectory since early December, hitting a 52-week high only last week and coming within striking distance of an all-time peak. Since bottoming in late February of 2016, shares have surged more than 65%. Chart source: thinkorswim® by TD Ameritrade.  Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

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