Electric-car company Tesla (TSLA 0.08%) just put a date to its first-quarter update: April 24. The report follows the automaker's recent update on first-quarter deliveries, which were worse than expected. The shortfall in deliveries and the stock's nearly 20% decline so far this year will have investors watching the update closely.
Ahead of the earnings release, here's a look at some of the key narratives worth checking on when the automotive company reports results.
Though Tesla was able to strengthen its cash on hand over its last two reported quarters thanks to positive free cash flow in each period, the electric-car maker's cash likely took a substantial hit in Q1.
Helped by $881 million and $910 million in third- and fourth-quarter free cash flow (cash from operations less capital expenditures), respectively, Tesla's cash and cash equivalents increased from $2.2 billion at the end of Q2 to $3.7 billion by the end of last year. But a $920 million bond payment during Q1, combined with management's expectations for a loss in Q1, suggest the company's cash position could easily fall by a billion dollars or more in Q1 compared to the fourth quarter of 2018.
This is why investors should check in on Tesla's first-quarter cash flow. While investors should expect free cash flow for the period to be negative, it's not clear how badly cash flow will be impacted by the company's worse-than-expected first-quarter deliveries.
Model S and X
Investors should also look for commentary from management on Model S and X.
Combined deliveries of the two vehicles fell sharply in Q1, declining 56% sequentially and 45% year over year to about 12,100. While Tesla had expected Model S and X deliveries to be lower both sequentially and year over year, they were only supposed to be slightly below where they were in the first quarter of 2018 (21,815 deliveries).
There was clearly a pull forward in demand for the vehicles, as customers anticipated the scheduled reduction of the federal tax credit on Jan. 1. But such a steep pullback in deliveries is surprising. Does Tesla expect deliveries to pick back up, or is Model 3 cannibalizing Model S and X sales?
Finally, investors should look for an update on Tesla's full-year guidance. While the electric-car maker reaffirmed its guidance for 360,000 to 400,000 total deliveries in 2019 when it reported its first-quarter deliveries earlier this month, management will have nearly three additional weeks of vision into the year when it reports its first-quarter financial results.
Tesla is currently guiding for full-year deliveries to increase 45% to 65% year over year, to 360,000 to 400,000 units. This growth is key for the company, as it will help it attain the scale required to achieve positive net income and free cash flow in the remaining quarters of 2019. Is Tesla still aiming for this many deliveries?
Tesla will report its fourth-quarter results after market close on Wednesday, April 24.