Investor's Corner

Tesla (TSLA) surges 14% in 2018 ahead of February 7 earnings report

Tesla’s market cap has increased by more than $2 billion this week, with shares (NASDAQ: TSLA) rising more than 3% in the week and nearly 14% for the year-t0-date.  As the California-based electric car maker and energy firm enter the second month of the year, investors’ sentiments appear to be optimistic ahead of Tesla’s upcoming Q4 2017 earnings report.

According to analysts polled by FactSet, Tesla is expected to report an adjusted loss of $3.04 a share on sales of $3.3 billion in the quarter, a significant difference from its figures the previous year. By comparison, the California-based electric car maker and energy firm posted an adjusted loss of 69 cents a share on sales of $2.3 billion during Q4 2016. Still, Tesla shares have gained 42% in the past 12 months, more than doubling gains for the S&P 500 index Dow Jones Industrial Average.

While expectations are high that losses would be significant during the last quarter of 2017, many investors in the online forum community have remarked that they expect Tesla to recover and grow in the months to come as well. Many even noted that the behavior of Tesla’s stocks this January follow a pattern that’s similar to market trends back in 2013, when the company’s shares soared amid a successful debut of its Model S luxury sedan.

Positive investor sentiment is also shared by Baird analyst Ben Kallo, who recently published a note about his expectations for the Elon Musk-led electric car maker and energy firm. According to the analyst, Tesla’s early issues with Model 3 production during Q3 2017, coupled with the company’s adjusted guidance for the car’s optimum manufacturing and delivery, might ultimately affect the company’s stocks positively. Kallo even noted that Tesla’s adjusted Model 3 delivery timeline, published earlier this month, seemed to have “de-risked” the company’s shares.

“We think shares will react favorably if the company guides to more than 10,000 Model 3 deliveries in the first quarter of 2018. Additionally, we believe Tesla can fund the Model 3 ramp without raising additional capital, but think a raise would remove an additional overhang,” Kallo wrote in his report, according to Barron’s.

Overall, Kallo noted that Tesla’s stocks would likely hit $411 in the near future. Investors in the online community were a bit more generous, with some speculating that the $500 barrier might be breached by the Silicon Valley-based electric car firm before the end of this year.

Tesla ended Q4 2017 by hitting a number of milestones. Deliveries for the Model S and the Model X reached new records, exceeding the company’s initial target of delivering 100,000 cars within the year. Two new vehicles — the Tesla Semi and the next-generation Roadster — were also revealed. Apart from these, the pace of Model 3 deliveries also improved significantly, with Tesla stating that during the final days of December, the production of the mass market compact electric sedan extrapolated to over 1,000 units per week.

 

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions.

Tesla (TSLA) surges 14% in 2018 ahead of February 7 earnings report
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