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What To Watch For In Tesla’s Earnings Wednesday

The main concerns of the luxury electric carmaker's investors are the company’s new vehicles, manufacturing capacity, and cheap gasoline.

What To Watch For In Tesla’s Earnings Wednesday
[Photo: NRMA New Cars via Wikimedia Commons]

Tesla is set to announce earnings Wednesday as investors worry about the company’s new vehicles, manufacturing capacity, and cheap gasoline.

The luxury electric carmaker’s stock fell 9% to $147.99 Monday, its lowest point since January 2014. The stock is off almost 25% from the beginning of February, when it was trading for $196.94.

Investors’ chief concern is the rate at which Tesla can push new cars off the production line.

Tesla Motors Inc. (TSLA) Stock Price - 30 Days | FindTheCompany

Tesla was producing its most recent creation, the Model X CUV (crossover utility vehicle), which looks like the progeny of a car and and SUV, at a rate of 250 vehicles per week at the end of 2015. That’s well below its stated goal of producing 800 of the vehicles per month.

Overall, the Palo Alto, Calif.-based company produced a little more than 50,000 vehicles last year, but is said to be tracking well below the 500,000 vehicles it has said it wants to produce yearly by 2020.

So analysts and investors will be listening carefully for Tesla CEO Elon Musk to give guidance on how many vehicles his company will produce in 2016. If the company expects to make solid progress toward its 2020 goal, investors might stop running for the exits. However, if the guidance is well below the implied 80,000 to 85,000 production number needed to stay on pace, things could get ugly in after-hours trading Wednesday.

US Gas Price (weighted average) | FindTheData

Part of the reason for the bear market for TSLA stock is a general negative sentiment about automakers on Wall Street so far this year. Ford and General Motors have also had bad months. Tesla’s stock was tracking with Ford and General Motors stock through January, but dropped sharply downward in February, whereas the other stocks declined more evenly.

At least one analyst believes that the Model X production anxieties are overblown. "...we see the concern on Model X production ramp…as overdone at this point," wrote Credit Suisse analyst Dan Galves in an investor brief. He added that Tesla's Model S faced similar challenges when production began.

Investors will also be keen to hear about the progress made on Tesla’s new Gigafactory battery plant in Las Vegas. The new plant, Tesla says, is expected to provide many of the batteries for the company’s first mass market vehicle, the $35,000 Model 3, which is expected in 2017. The Model 3 is expected to compete with the BMW 3-Series and the Audi A4.

Analyst Brian Johnson of Barclay's wrote in a research note Tuesday that he expects Tesla roll out a prototype of the new Model 3 later this year, which should "reinvigorate interest" in the automaker and its stock.

A consensus of Thomson Reuters analysts expect Tesla to report fourth-quarter profits of 8 cents per share on revenue of $1.79 billion. Tesla reported an adjusted loss of 13 cents per share on sales of $1.095 billion in the same quarter a year ago.

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