Tesla Third Quarter 2014: Analysts Predict $3.5M In Net Profit, One-Time Charges Will Swing Earnings To A Loss

Tesla Motors will announce third-quarter results on Nov. 5 after markets close in New York, and fans of the Palo Alto, California-based electric carmaker will be looking at some basics, including the number of Model S cars sold, as well as details regarding the upcoming Tesla Model X crossover. Investors will want to see progress in profit-margin expansion, which would indicate how well Tesla has done to bring down costs in its supply chain.

Analysts polled by Thomson Reuters expect Tesla to eke out $3.5 million in net profit on $893.6 million in revenue, down from $15.9 million in profit on $602.6 million in revenue in the same quarter of 2013. Excluding one-time expenses, Tesla is expected to break even on earnings per share; including expenses, the company is expected to swing to a loss of 18 cents per share. In the third quarter of 2013, Telsa reported earnings of 12 cents per share, or a loss of 32 cents per share including one-time charges.

Tesla will offer an audio webcast of its third-quarter earnings conference call featuring CEO Elon Musk here at 2:30 p.m. PDT (5:30 p.m. EDT).

Now that speculation is settled regarding the planned $5 billion “gigafactory” battery production facility -- the company confirmed in September that it was building the site near Reno, Nevada -- investors will be looking for any indication of the company’s progress in China, considered a key global market, as well as progress in Europe, where the auto industry has been struggling for years amid the region’s economic woes.

Tesla’s adjusted losses for the quarter are linked to its ongoing aggressive global expansion efforts, especially the fleshing out of its rapid-charging stations in the U.S., Europe and China. Last month the company installed its 200th rapid-charging station in the U.S., double the number the company had in May. Tesla also incurred additional expenses in the quarter when it announced it would expand its warranty policy to cover the drive train, which includes cars it has already sold.

The company also shut down its sole Fremont, California, manufacturing plant for two weeks in the quarter to install new robots and expand capacity ahead of next year’s release of the Model X crossover. The company has been quiet about progress in developing the Model X, leading to speculation that the car might not be released in March as CEO Elon Musk said it would. The Tesla Model X release has been delayed two times already, in part because the company has been working on issues with the design of the vehicle’s unique “falcon wing” doors, which allow adults to stand up completely while inside the rear seats for easier groceries and child-seat loading. Any indication in the Nov. 5 earnings report of when the Model X will come out will likely impact Tesla's stock price.

A third delay in the Model X would raise questions about the scheduled 2017 release of the sub-$40,000 Model 3. Tesla's business plan has always been to sell expensive luxury electric vehicles as a way to eventually build a mass-market electric vehicle with a range topping 200 miles per charge, or more than twice the rage of the current raft of lower-priced electric vehicles such as the Nissan Leaf.

On Oct. 9, Tesla announced a new $120,000 premium all-wheel-drive Tesla Model S P85D with a searing 691 horsepower and 687 pounds-feet of torque and new driver assist option for all of the newly produced Model S cars. Investors reacted coolly to the news. The company’s stock price fell nearly 13 percent in the three trading days after the announcement, more than erasing the gains made in the runup to the unveiling. Some commentators pointed out that Tesla is simply playing “catchup” by offering all-wheel drive and driver assistance options that other luxury carmakers have been offering as pricey add-ons for a while -- think Audi’s Quattro or Mercedes-Benz’s Intelligent Drive.

Tesla’s story is captivating fans of new technologies and electric cars, and the company’s share price reflects this enthusiasm. Despite the decline seen in the wake of the company’s P85D announcement earlier this month, Tesla’s stock has risen nearly 56 percent since the start of the year. The price gained a little over 1 percent in the third quarter ended Sept. 30. On Tuesday it was trading up 1.62 percent, to $234.19, well below its 52-week high of $291.42 touched on Sept. 4.