Tesla Stocks Could Crash If Elon Musk Reports Q4 Earnings Miss, Analyst Predicts

KEY POINTS

Analyst forecast that Tesla's EPS will be $0.58
Analyst says that if Tesla reports don't deliver good results in Q4, the company's stock risk a sell-off
Tesla produced more vehicles in 2018 and a slightly higher deliveries than the previous quarter

Tesla stock traded at $255 before the Q3 results and surged right after the announcement of unexpected profit. The electric vehicle's stock price has not looked back, doubled its value, and even reached an all-time high of $594.50 on Wednesday last week.

On Tuesday, the stock is rising again ahead of the fourth-quarter earnings report, but the question brought up by some analysts is: will the earnings report justify its stock's performance? Jim Cramer, the host of CNBC's "Mad Money," thinks that it should or the stock risks a huge sell-off.

"If Tesla stumbles, the stock will sell off hard, but I believe my buddy-pal-friend Elon Musk will deliver," Cramer said.

For the quarter ending in December 2019, analysts forecast an EPS of $0.58, which is 27 percent lower than a year before. Still, Q4's growth was an improvement to the previous quarter and in 2018.

Tesla produced almost 105,000 vehicles in the fourth quarter with 17,933 for the Model S/X and 86,958 for the Model 3. The total deliveries amounted to 112,000 vehicles (19,450 for Model S/X and 92,550 for Model 3) and that brings the total to 367,500 in 2019, a 50 percent increase from 2018.

Cramer said that Tesla skeptics became Tesla believers after the surprising Q3 figures, but the stock could also have been boosted by the increased production capacity thanks to the manufacturing plant in Shanghai that was build in only 10 months.

"Tesla’s spectacular performance has silenced its critics, and the results have been fabulous for the shareholders," Cramer said.

And despite the outbreak of the coronavirus in China, Dan Ives, an analyst for Wedbush, wrote in a note on Tuesday that he doesn't see this having much of a significant effect on Tesla's production. The worst-case scenario that Ives pointed out is 6,000 to 10,000 deliveries pushed until the second quarter.

However, despite the strong performance of Tesla's stock, it still lags behind Porsche, BMW and Mercedes Benz in operating profit per vehicle. From 2016 to 2019, all three automakers recorded profits per vehicle sold each quarter while Tesla was only profitable in 4 quarters in those years, according to Autoblog.