Tesla (TSLA) is scheduled to report results of its third fiscal quarter on October 23, 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 continues to aim for positive GAAP net income in the third quarter and following quarters, although continuous volume growth, capacity expansion and cash generation will remain the main focus. The company’s 2019 capex is expected to be about $1.5B-$2.0B, a reduction from prior guidance.
2. PRODUCTION, DELIVERY UPDATE: Earlier this month, Tesla reported third quarter production and deliveries data. The company said it achieved record production in the third quarter of 96,155 vehicles and record deliveries of approximately 97,000 vehicles. For the Model S/X, the company produced 16,318 vehicles and delivered 17,400 vehicles. For the Model 3, the company produced 79,837 vehicles and delivered 79,600 vehicles. In addition, Tesla added that it "achieved record net orders in Q3" and is entering Q4 with an increase in its order backlog. As was also the case in the second quarter, nearly all of its Model 3 orders were received from customers who did not previously hold a reservation. Additionally, the electric carmaker said it is continuing to focus on increasing production to meet that demand, and noted that its delivery count should be viewed as slightly conservative, as it only counts a car as delivered if it is transferred to the customer and all paperwork is correct. Final numbers could vary by up to 0.5% or more.
In a leaked email prior to the data release, Elon Musk had pointed to 100,000 deliveries for the quarter, which did not happen.
3. GROSS MARGINS BEAT: In a research note ahead of Tesla’s quarterly results, Oppenheimer analyst Colin Rusch said he continues to believe the third quarter delivery number was strong relative to expectations and positions the company to beat gross margin estimates should it deliver on some of the manufacturing efficiencies it has been working on. The analyst also argued that gross margin may also benefit from higher mix of Model 3 sales in the EU, and believes emission credit monetization could also boost earnings this quarter and are an underappreciated cash flow driver in Europe beginning in January when new emissions standards are implemented.
4. SOLAR PANEL BUSINESS RELAUNCH: Tesla was offering no-contract solar-panel packages as part of a relaunch announced by CEO Elon Musk via Twitter back in August. The executive said that, "Tesla Solar just relaunched. Lmk what you think [...] With the new lower Tesla pricing, it's like having a money printer on your roof if you live a state with high electricity costs. Still better to buy, but the rental option makes the economics obvious. [...] One click to order solar & save ~$500/year in utility bills with no long-term contract (cancel anytime)." Answering to a question by a user, Musk added that Tesla Solar will launch in Europe "next year."
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