Mark your calendars: For the second quarter in a row, Tesla's (TSLA 5.46%) quarterly earnings release is coming earlier than usual. The company is slated to report fourth-quarter and full-year results on Jan. 30. This compares to fourth-quarter updates in 2018 and 2017 on Feb. 7 and Feb. 22, respectively.
Having already reported its vehicle deliveries for the period, investors will be primarily focused on Tesla's financial results, forecasts, and any commentary on vehicle demand. Ahead of the results, here's a look at some of the areas investors will want to watch.
Model 3. Image source: Tesla.
Profit
Tesla took investors by surprise when it reported a bigger-than-expected third-quarter profit. It earned a GAAP profit of $312 million and a non-GAAP profit of $516 million. This translated to GAAP and non-GAAP earnings per share of $1.75 and $2.90, respectively.
At the time of the company's third-quarter update, management said it expected to be profitable again in Q4. But Tesla gave investors more insight about what to expect from profitability in a recent letter to employees detailing a 7% reduction in the company's full-time workforce. "In Q4, preliminary, unaudited results indicate that we again made a GAAP profit, but less than Q3," it said.
This suggests Tesla's fourth-quarter GAAP earnings per share will be positive but below $1.75. Based on the company's 8% sequential growth in vehicle deliveries and its prioritization of sales of high-end Model 3 vehicles in North America during the quarter, earnings per share won't likely be too much lower than the $1.75 it posted in Q3. EPS around $0.80 to $1.50 for the period is likely.
Cash and cash equivalents
Leading up to the third quarter, cash and cash equivalents were moving in the wrong direction -- and fast -- going went from $3.4 billion at the end of 2017 to $2.2 billion in Q2. But $881 million in third-quarter free cash flow put cash and cash equivalents at the end of the period at about $3 billion, alleviating some of investors' concerns about cash flows.
Investors should check in on Tesla's cash and cash equivalents for its fourth quarter -- especially since the company expects its global expansion for the Model 3 to weigh on first-quarter profitability.
Guidance
Finally, investors will want to look for any forward-looking commentary from management, particularly as it pertains to the demand for its vehicles, product timelines, and production targets.
Some questions investors should watch for management to answer include:
- How is the demand for Model 3 faring?
- When should investors expect Tesla to launch the cheaper, $35,000 variant of the Model 3?
- What weekly production rate for Model 3 is it aiming for now? For context, it produced an average of 4,300 Model 3 vehicles per week in Q3 and 5,300 in the last week of the quarter.
- How many Model 3 vehicles does Tesla expect to deliver in 2019?
- Does management expect combined Model S and X deliveries to remain around their current 100,000-unit annualized rate even as Model 3 deliveries rise?
Tesla will report its fourth-quarter results after market close on Wednesday, Jan. 30.
Check out the latest Tesla earnings call transcript.
