Investor's Corner
Tesla beats on revenue, misses on Model 3 production, stumbles to reduce losses
Tesla released its third quarter 2017 earnings after the closing bell on Wednesday, summarized in the Q3’17 Update Letter. The results beat Wall Street’s revenue expectations and missed on bottom line. The company posted third-quarter earnings loss of $2.92 per share, representing a wider loss than analyst estimates of a $2.27 per share loss. Revenue was $2.98 billion versus an estimate of $2.92 billion.
REVENUE
The company’s revenue consisted of $2.36B in automotive revenue, $317.5M in energy generation and storage, and $304M in service and other revenue. Automotive revenue increased 3.33% over the second quarter, while energy generation and storage grew 10.7%. Automotive revenue primarily grew from the 4.5% sequential increase in Model S and X deliveries. Tesla attributed the gains in energy generation and storage to their south Australia battery storage project.
The company deployed 109 MW of energy generation products and 100MWh of energy storage products in Q3. This is a sequential increase of 12% over Q2 and 138% increase year-over-year. Tesla also stated that now 46% of residential solar installations were sold rather than leased, this is compared to just 13% of all residential solar in Q3 2016.
MODEL 3
Tesla delivered 222 Model 3s in the third quarter, representing a fraction of the total amount of the company’s deliveries and revenue. Tesla did not disclose in its Q3 letter the number of Model 3 units produced in the fourth quarter thus far, but did identify Model 3’s production bottlenecks to be that of the battery module line at Gigafactory 1. Tesla notes that the company decided to take over an automated process related to production of Model 3’s battery module from a ‘manufacturing systems supplier’ and redesign the process in-house. “We are confident that throughput will increase substantially in upcoming weeks and ultimately be capable of production rates significantly greater than the original specification.” read Tesla’s update letter.
Tesla also included a video of the Model 3 being worked on in general assembly.
GUIDANCE FOR END OF 2017
While Tesla expects the Model 3 to have a break-even gross margin in Q4, then go on to “improve rapidly” to their target of 25% in 2018. The company previously expected the Model 3 to carry a positive gross margin in Q4, but production “bottlenecks” pushed back that goal. In Q4 the overall non-GAAP automotive gross margin is expected to drop to 15%, compared to 18.7% in Q3.
Tesla expects to produce a total of 100,000 Model S and X vehicles this year and expects to reach a production level of 5000 Model 3 vehicles per week will at the end of Q1 2018.
Tesla has just over $3.53B in cash at the end of the quarter, up nearly $137M from Q2. This includes the $1.8B the company raised through a debt offering in August. The company expects to spend roughly $1B on capital expenditures in Q4, compared to $1.1B in Q3.
Today’s session ended up closing down at a 3.15% a loss and down another 4.07% in after-hours. Looking at the after-hours trading action after the close, the initial reaction to the numbers for Q3 2017 is quite negative, with the stock dropping to $308. Still, Tesla stock is up 50% in 2017 and nearly 70% in the past 12 months.
The full Q3 letter can be found here.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
Investor's Corner
Tesla wins $508 price target from Stifel as Robotaxi rollout gains speed
The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Tesla received another round of bullish analyst updates this week, led by Stifel, raising its price target to $508 from $483 while reaffirming a “Buy” rating. The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Robotaxi rollout, FSD updates, and new affordable cars
Stifel expects Tesla’s robotaxi fleet to expand into 8–10 major metropolitan areas by the end of 2025, including Austin, where early deployments without safety drivers are targeted before year-end. Additional markets under evaluation include Nevada, Florida, and Arizona, as noted in an Investing.com report. The firm also highlighted strong early performance for FSD Version 14, with upcoming releases adding new “reasoning capabilities” designed to improve complex decision-making using full 360-degree vision.
Tesla has also taken steps to offset the loss of U.S. EV tax credits by launching the Model Y Standard and Model 3 Standard at $39,990 and $36,990, Stifel noted. Both vehicles deliver more than 300 miles of range and are positioned to sustain demand despite shifting incentives. Stifel raised its EBITDA forecasts to $14.9 billion for 2025 and $19.5 billion for 2026, assigning partial valuation weightings to Tesla’s FSD, robotaxi, and Optimus initiatives.
TD Cowen also places an optimistic price target
TD Cowen reiterated its Buy rating with a $509 price target after a research tour of Giga Texas, citing production scale and operational execution as key strengths. The firm posted its optimistic price target following a recent Mobility Bus tour in Austin. The tour included a visit to Giga Texas, which offered fresh insights into the company’s operations and prospects.
Additional analyst movements include Truist Securities maintaining its Hold rating following shareholder approval of Elon Musk’s compensation plan, viewing the vote as reducing leadership uncertainty.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
Investor's Corner
Tesla receives major institutional boost with Nomura’s rising stake
The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Tesla (NASDAQ:TSLA) has gained fresh institutional support, with Nomura Asset Management expanding its position in the automaker.
Nomura boosted its Tesla holdings by 4.2%, adding 47,674 shares and bringing its total position to more than 1.17 million shares valued at roughly $373.6 million. The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Institutional investors and TSLA
Nomura’s filing was released alongside several other fund updates. Brighton Jones LLC boosted its holdings by 11.8%, as noted in a MarketBeat report, and Revolve Wealth Partners lifted its TSLA position by 21.2%. Bison Wealth increased its Tesla stake by 52.2%, AMG National Trust Bank increased its position in shares of Tesla by 11.8%, and FAS Wealth Partners increased its TSLA holdings by 22.1%. About 66% of all outstanding Tesla shares are now owned by institutional investors.
The buying comes shortly after Tesla reported better-than-expected quarterly earnings, posting $0.50 per share compared with the $0.48 consensus. Revenue reached $28.10 billion, topping Wall Street’s $24.98 billion estimate. Despite the earnings beat, Tesla continues to trade at a steep premium relative to peers, with a market cap hovering around $1.34 trillion and a price-to-earnings ratio near 270.
Recent insider sales
Some Tesla insiders have sold stock as of late. CFO Vaibhav Taneja sold 2,606 shares in early September for just over $918,000, reducing his personal stake by about 21%. Director James R. Murdoch executed a far larger sale, offloading 120,000 shares for roughly $42 million and trimming his holdings by nearly 15%. Over the past three months, Tesla insiders have collectively sold 202,606 shares valued at approximately $75.6 million, as per SEC disclosures.
Tesla is currently entering its next phase of growth, and if it is successful, it could very well become the world’s most valuable company as a result. The company has several high-profile projects expected to be rolled out in the coming years, including Optimus, the humanoid robot, and the Cybercab, an autonomous two-seater with the potential to change the face of roads across the globe.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
Tesla CEO Elon Musk teases insane capabilities of next major FSD update
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
