Tesla Earnings Preview: What Wall Street's Thinking
Updated from 9:14 a.m. to include thoughts from Jefferies analyst.
NEW YORK (TheStreet) -- Though Tesla Motors
At the Detroit Auto Show last month, Tesla Vice President Jerome Guillen announced that the company delivered 6,900 Model S units during the quarter, 20% higher than the company's initial estimate. Tesla cited "the superlative safety record of the Model S and great performance under extremely cold conditions" as driving demand for the vehicle. The news sent shares soaring that day, and ever since then, Tesla's been a rocket ship, continuing its 2013 momentum into 2014.
Analysts surveyed by Thomson Reuters expect Tesla to earn 21 cents a share on a non-GAAP basis, generating $677.36 million in revenue.
Shares of Tesla were active in early Wednesday trading, down 2.85% to $197.90.
Many of Tesla's issues in 2013 stemmed from concerns about the safety of the Model S and the company's ability to meet demand. However, at least judging by the 6,900 units delivered, Tesla can satisfy consumer demand for the vehicle. The safety of the Model S is another story, as the National Highway Traffic Safety Administration (NHTSA) continues to work on the probe Tesla asked for.
The Model S has already been cleared by Germany's version of the NHTSA, the German Federal Motor Transport Authority, Kraftfahrt-Bundesamt (KBA). However, recent reports have noted that another Model S went on fire in a garage in Toronto. The company is looking into the situation.
Outside of the safety concerns and ability to meet demand, CEO Elon Musk has constantly stated Tesla is striving to reach 25% gross margins on its vehicles, excluding Zero Emission Vehicle (ZEV) credits, which governments give out for selling eco-friendly cars. During the third quarter, Tesla generated 21% gross margins, ex-ZEV credits. At the time, the company noted it could make additional progress on margins "if customers continue to purchase our vehicles with a high option take rate."
Going into the earnings print, Wall Street analysts were by and large positive on the name, with many expecting positive things to come in 2014, including the eventual launch of the Model X, Tesla's sports-utility-vehicle (SUV). Here's what a few of them had to say, prior to the report:
Wedbush analyst Min Xu (Outperform, $205 PT)
Jan. 27 note
"We see strong positives in Tesla's credible path to longer-term battery cost reduction and the Gen-III vehicle target costs, and what we believe will be a receptive buying public willing to purchase EVs while retaining reasonable expectations for these vehicles. Tesla's multi-year lead over credible competition suggests the company is well positioned to deliver an aggressive volume ramp."