Electric-car maker Tesla (TSLA +0.73%) plans to announce its results for its first quarter of 2017 on Wednesday, May 3, the company said on Thursday. Ahead of its important Model 3 launch later this year, the quarterly update comes at a critical time for the company. Not only will it help investors get a glimpse into Tesla's financials ahead of its plans for a rapid ramp-up in vehicle production, but it will likely provide some insight into Tesla's progress on bringing its Model 3 to market.
Ahead of Tesla's earnings release, here are three things investors might want to start thinking about.
Tesla vehicle production. Image source: author.
1. Expect a meaty automotive gross profit margin.
For Tesla, making electric vehicles has proved to be quite lucrative on a per-vehicle basis. Sure, the company is spending billions of dollars on expanding its business, leading to overall losses. But investors can take comfort in the company's solid automotive gross profit margin, knowing that if Tesla wanted to report profits today it could simply scale back its growth ambitions.
Tesla's non-GAAP automotive gross margin, which excludes zero emission vehicle credits and stock-based compensation, was 22.2% in the company's most recent quarter. Its GAAP automotive gross margin was 22.6%. In Q1, however, Tesla expects an even better automotive gross margin. Management said in the company's fourth-quarter update it expects non-GAAP and GAAP automotive gross profit margins to "recover in Q1 to Q3 2016 levels and then continue to expand in Q2 2017." The company's non-GAAP and GAAP automotive gross profit margins in the third quarter of 2016 were 25% and 29.4%, respectively.
2. Capital expenditures may rise sharply.
Potentially giving investors some insight into the aggressiveness of Tesla's preparations for high-volume Model 3 production, investors can look to Tesla's capital spending for the quarter. While Tesla didn't provide specific guidance for its capital spending in the first quarter, it did say it expected to spend between $2 billion and $2.5 billion during the first half of the year -- well above Tesla's $1.3 billion in capital expenditures during the entire year of 2016.
"We continue to focus on capital efficiency while also investing in battery cell, pack and energy storage production at Gigafactory 1," Tesla said about its plans for capital expenditures.
Rapidly rising Model X deliveries helped Tesla report record deliveries in Q1. Image source: author.
3. Will Tesla raise its guidance for vehicle deliveries?
Since Tesla has already shared its vehicle deliveries for its first quarter -- a record 25,000 units -- investors will likely turn their attention to any commentary on what to expect from Model S and Model X deliveries in Q2.
Going into Tesla's first quarter of 2017, the company said it expected to deliver 47,000 to 50,000 Model S and Model X units combined. So, with about 25,000 units already delivered, this leaves about 22,000 to 25,000 units left to be delivered during the first half of the year. Will Tesla raise its guidance for vehicle deliveries during the first half of the year after such a strong first quarter?
Tesla plans to post its earnings release for its first quarter after market close on May 2. Stay tuned to The Motley Fool for more Tesla coverage, as well as an analysis of the company's first-quarter results when they go live.
