Tesla Inc (Nasdaq: TSLA) gets yet another chance on Wednesday to show the market it is getting back on track following repeated delays in its Model 3 production ramp. Unfortunately for Tesla investors, some analysts expect more disappointment.
Analysts forecast Tesla to report a fourth-quarter earnings-per-share loss of $3.10 on revenue of $3.28 billion. But Tesla investors will likely forgive yet another quarter of massive losses if the company can demonstrate it can start hitting targets for Model 3 production.
In January, Tesla reported just 1,550 Model 3 deliveries in the fourth quarter. Tesla CEO Elon Musk had originally said the company would be producing 5,000 Model 3s per week by the end of 2017. After bumping that target from December to late in the first quarter of 2018, Tesla says it expects to reach the 5,000-per-week target by “the end of Q2.”
Another key number investors will be watching closely is cash balance. After burning through $1.4 billion in cash in the third quarter, Tesla’s remaining balance was just $3.5 billion as of last quarter.
While investors are hoping the company changes its Model 3 tune on Thursday, KeyBanc analyst Brad Erickson says the pattern of Tesla Model 3 misses will likely continue.
“Our channel checks indicate Model 3 deliveries are still ramping very slowly, causing us to lower our 1Q and 2018 Model 3 delivery and gross margin assumptions even further below consensus heading into tomorrow afternoon’s earnings report,” Erickson says.
After speaking with representatives from 16 Tesla sales centers, Erickson lowered his first-quarter Model 3 delivery target from 13,000 to 8,500.
He also lowered his forecast for full-year 2018 Model 3 deliveries from 108,000 to 98,500 and full-year gross margin estimate from 14.5 percent to 11.7 percent.
Erickson also says early Model 3 quality is critical for Tesla’s long-term demand, and the company has to be careful to balance vehicle quality with production quantity.
“We found numerous responses throughout our checks suggesting Model 3 cars are being delivered to sales centers with slight blemishes of fit and finish,” Erickson says.
KeyBanc is…
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