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Tesla Motors, Inc. (TSLA) Q4 Earnings Preview: 20,000 Deliveries Or Bust

 February 20, 2013 12:04 PM

(By Rich Bieglmeier) Tesla Motors, Inc. (TSLA) will post financial results for the fourth quarter and calendar year ended December 31, 2012, after market close on Wednesday, February 20, 2013. At that time, Tesla will issue a brief advisory release via Marketwire containing a link to the fourth quarter 2012 Shareholder Letter, available on the company website. Tesla management will hold a live Question & Answer (Q&A) session at 2:30pm Pacific Standard Time (5:30pm Eastern Standard Time) to discuss the Company's financial and business results and outlook.

Wall Street anticipates that TSLA will lose $0.53 for the quarter. iStock expects the electric vehicle (EV) maker to report earnings that will beat Wall Street's consensus number. The iEstimate is -$0.51, a 2 cents upside surprise.

[Related -Lithium War Heats Up After Epic Launch Of Tesla Model 3]

Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components. It markets and sells its vehicles through corporate events, and directly to consumers through the phone and Internet, as well as its network of Tesla stores.

Tesla has reported earnings nine times in its limited public life. Five of the announcements were of the bearish surprise variety and four managed to top expectations. Surprises in either direction have been fairly limited, but heavier on the miss side as the average beat was 4% versus 9.27% on the miss side of the ledger.

[Related -What's The Best Electric Car Investment?]

TSLA's stock performance in the days surrounding earnings flips the beat/miss ratio as the price moved higher five times by an average of 9.86% with three of the five gains exceeding 11%. Meanwhile, shares dropped by an average of 8.98% for the four earnings driven dips with two slides greater than 14%.

According to Tesla Motors Club, which tracks Tesla Vehicle Identification Numbers, the highest VIN delivered in Q4 was 3026. That suggests management hit the middle of the range.

In September, the company said it planned to deliver 2,700 to 3,225 cars by the end of the year [2012]. Interestingly, the consensus estimate of a loss of 53 cents is 2 cents short of the middle of the analysts' range of -0.44 to -0.65, and on par with our iEstimate – go figure?

Meet, beat, or miss earnings, it probably won't matter. Instead, Wall Street and investors alike will look at guidance. Management set a target of 20,000 EVs delivered in 2013. To get there, Tesla needs to sell 1,667 vehicles a month and take in a little less than 55 firm orders per day.  Factor in a 10-15% cancellation rate, which seems to be the consensus guestimate, and orders need to run in the neighborhood of 61 to 65 per day.

It appears that numbers are a little short on both accounts; although, it's not necessarily bad news. According to InsideEVs.com, Tesla's Model S outsold all other electric cars in January coming in somewhere between 1,200 and 1,600 - a big range and slightly below the 1,667 target.

Back to the enterprising enthusiasts at Tesla Motors Club, they report that new orders are approximately "44 cars per day or 308 per week." Significantly short of the target range when including cancellations; however, the trend is your friend as orders started 2013 in the 30 per day range. iStock would expect Tesla to hit their marks as 2013 rolls on as the  Model X becomes available in 2014.

If management executes and the numbers come in "right" late Wednesday afternoon, then the stock could pop. Fifty-three percent of TSLA's float (stock available for trading) is sold short while shares are slightly below their 52-week intraday and all-time high of $40. A big, positive surprise coupled with robust "we are ahead of target" guidance, and some shorts could get squeezed into buying to limit losses; especially if the price breaks into the open fields of all-time highs with zero technical resistance overhead.

On the downside of a disappointing report, the EV maker's price hasn't closed below their 50-day average since early November 2012. iStock would expect the key trend-line to offer up initial support on any sell-off somewhere near $35.75.

Overall, Tesla Motors, Inc. (TSLA) is a richly priced stock at 30 times sales. Management's batteries will have to fully charged and executing near flawlessly to cast critics and short-sellers aside. iStock has the sense that Q4 earnings report will give both sides ammo for their side of the story. If the delivery and orders guesstimates are correct, then bears will say the company is falling short of its goals, downward revision are necessary, and the stock doesn't warrant such lofty valuations.

Bulls are likely to focus on growing sales figures and orders trending in the right direction and conclude that it is just a matter of when, not if for Tesla shareholders.



2/20/2013 1:45:25 PM
by Mike
Just a thought: They don't need to reach that 55 cars/day number until after they have already burned down their entire reservation backlog. So, they actually have several months to reach that rate. Also, the number you quoted for reservations per day is the U.S. number, but the 20k/year goal is world-wide. Marketing is just getting started in Europe and is non-existant in China, yet. I fully expect that they will raise their 2013 estimate to 25k or 30k. In fact, there is plenty of evidence that they are already operating at a rate above 20k, so we really just need them to make it official for us.
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