09:35 Wednesday 24 October 2018.
What a difference a quarter makes…
Three months ago when Tesla reported for Q2 it was business as usual, jump forwards to today’s Q3 earnings report and the world has shifted for the electric car giants. Since Elon Musk’s now notorious ‘Going Private’ tweet, the SEC have taken Musk and Tesla to court under a market manipulation charge in relation to claims that he had secured funding and valued the stock at $420. Musk initially refused to settle the case with the SEC, but then without admitting guilt or committing any wrongdoing he cut a deal which saw him stand down as chairman of Tesla and pay a £20m fine. The deal was ratified by a judge on 16th October.
Since the initial tweet and following all the other twists and turns in the story, it has been a rollercoaster ride for investors and following the settlement, Tesla stock remains sensitive to news coming out and has strengthened as stability seems to have been restored and plans for a new Gigafactory 3 in China are in place.
This evening (6:30pm ET), Tesla will be reporting their Q3 report ahead of schedule and they have been rumoured to be announcing their first profits since 2016. Upon the news of the revised reporting date, one of Tesla’s biggest short seller Andrew Left of Citron Research, changed his view to a buy recommendation and began singing the praises of the company. In his note, Left asked "The last time Tesla reported Q3 earnings in October was in 2016 when revenue beat the consensus by 21%. Does anybody think that Tesla decided to move up its earnings release date because of bad news?" . Upon news of the change in Left’s position and speculation of profits, Tesla stock soared by over 12% yesterday and all eyes will be on the pre-market trading ahead of today’s report.
To fuel the rumours of profits, the carmakers have produced 83,000 vehicles in Q3 which represents over 80% of total output in 2017 and they appear to be making significant progress with Model 3 production which Musk had previously described as “manufacturing hell”. However, it is worth noting that Tesla are currently in debt of $10bn with $1.3bn being due for payment in 2019, meaning that they may wish to borrow further or issue more stock to cover the difference. Tesla has performed well below the NASDAQ for much of the year, however with the downturn of BAT FAANG stocks recently and upbeat sentiment around the company, Telsa may well overlap the composite in the coming days.
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