Tesla (TSLA) is scheduled to report results of its fourth fiscal quarter on January 29, with a conference call scheduled for 6:30 pm EDT. What to watch for:
1. OUTLOOK: During the company's last earnings call, Tesla said it sees positive quarterly free cash flow going forward, with possible temporary exceptions, particularly around the launch and ramp of new products. The company also said it continues to believe its business has grown to the point of being self-funding. The electric carmaker sees positive GAAP net income going forward, and added that continuous volume growth, capacity expansion, and cash generation remain the main focus. The company plans to produce limited volumes of Tesla Semi in 2020.
2. DELIVERY UPDATE: Earlier this month, Tesla reported fourth quarter deliveries that beat expectations. With the help of its "record" deliveries of approximately 112,000 vehicles, Tesla delivered approximately 367,500 vehicles for the year, topping the low end of the company's guidance range.
3. CYBERTRUCK: Back in November, Tesla CEO Elon Musk unveiled the Cybertruck electric pickup truck. The company's base Cybertruck model will cost $39,900 and will come in three variants. Customers can order the truck with a deposit of just $100, according to Bloomberg's Dana Hull and Edward Ludlow.
4. CHINA POTENTIAL: In a research note to investors, Wedbush analyst Daniel Ives said that he does not see any major disruption on the horizon for Tesla post Chinese New Year, other than maybe a timing issue, as the impact around Shanghai still appears to be in flux amid the coronavirus outbreak in the country. Ives ultimately believes Tesla can hit a 150,000 run-rate for units in China over the next year. Ives also noted that Tesla has been saying all its China vehicles will have free supercharging to facilitate travel until the outbreak is resolved, which he views as "a smart strategic move."
Earlier this month, Piper Sandler analyst Alexander Potter raised his price target for Tesla to $553 from $423 after analyzing the company's potential in China. If Tesla's Model 3 market share in the U.S. can be replicated in China, and if this logic extends also to Model Y, then Tesla's annual volume in China alone would eventually exceed 650,000 units, Potter contended. The analyst also said that while he is not sure Tesla can immediately replicate its U.S. success in China due to the strength of German brands in China, he is increasing his estimates nonetheless. Potter now expects China deliveries of 112,000 in 2020, 225,000 in 2021, and 399,000 in 2022. The analyst kept an Overweight rating on Tesla shares.
Back in December, Tesla China announced via Twitter that it was delivering "the first China-made Model 3 at Gigafactory 3 plant in Shanghai." The 15 customers to get their Model 3s first were Tesla employees.
5. 'EXTREME CAUTION' AFTER STOCK RUN: Last week, JPMorgan analyst Ryan Brinkman urged "extreme caution" on shares of Tesla following the stock's recent run. The analyst said he sees 58% downside risk relative to his unchanged price target of $240, and kept an Underweight rating on Tesla. Better deliveries, better earnings, and on-time start of production in China seem the likeliest catalysts for the recent rally, but a closer look suggests "less enthusiasm may be warranted," Brinkman contended, adding that he wonders if the strong close to 2019 could set the company up for a more challenging start to 2020.