If Tesla Motors Inc (TSLA) hopes to arrest the steep selloff in TSLA stock it’s going to have to deliver a solid report and some encouraging updates on new vehicles when it releases results Wednesday.
Tesla stock has been in a funk since last summer, but selling accelerated in the new year. Tesla stock is now off nearly 40% in 2016 alone.
The big issue is concern over the automaker’s highly anticipated Model X SUV. Indeed, investors are rightly worried about the production and potential sales performance of Tesla Motor’s flagship vehicle.
The electric SUV is behind schedule and Tesla has had much publicized difficulties with the Model X’s distinctive falcon wing doors. Also worrisome is that unforeseen issues with Model X production have caused bottlenecks affecting the company’s bread-and-butter Model S sedan.
If that weren’t enough, Tesla delivered just 50,000 vehicles last year. That was within the company’s forecast, but just barely — and it didn’t do much to reassure worried shareholders.
Oil prices are another concern. The value proposition for any electric vehicle becomes less compelling when gas only gets cheaper and cheaper.
And lastly, analysts and investors will be keen for any news regarding the development of Tesla Motors’ less expensive car, the Tesla Model 3. Tesla is supposed to launch the vehicle next year, and investors are heralding it as key to Tesla breaking through to ubiquity as a vehicle and brand.
High Stakes for TSLA Stock
So yeah, there’s a lot of pressure on Tesla with the upcoming quarterly report. As for the numbers, analysts, on average, expect Tesla to swing to a profit of 8 cents a share from a year-ago loss of 13 cents, according to a poll by Thomson Reuters.
Keep in mind that it’s usually better when analysts’ estimate are clustered closely together. In Tesla’s case, Wall Street forecasts range from earnings of 45 cents a share to a loss of 58 cents. Make of that what you will.
Revenue is projected to rise 64% to $1.79 billion.
Still, as much power as earnings and management commentary have to move TSLA stock this week, it looks like the short-term catalyst — or killer — is the March unveiling of the Model 3.
TSLA stock has always required a great deal of faith. Elon Musk is trying to do something fairly revolutionary, so huge swings and selloffs come with the territory. Whether or not you can handle the ride depends on your intestinal fortitude.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
