4Q16 earnings recap
In 4Q16, Tesla (TSLA) reported a non-GAAP (generally accepted accounting principles) net loss of $0.69 per share for the quarter and a $0.78 net loss on a GAAP basis. The results were worse than analysts’ estimates of a $0.58 per share loss on a GAAP basis. In the corresponding quarter of the previous year, the company reported a net loss of $0.87 per share on a GAAP basis.
The company’s weaker-than-estimated earnings resulted in a mixed reaction on Wall Street, as its stock fell 1.4% during that session.
1Q17 earnings estimates
Analysts are expecting Tesla’s 1Q earnings to be in the negative territory. They expect an increased loss on a YoY (year-over-year) basis. According to these estimates, the company will post a loss of about $0.77 per share on a non-GAAP basis. This expectation is worse than the company’s reported loss of $0.57 in the corresponding quarter last year.
In 1Q16, Tesla’s deliveries and production continued to witness notable improvements as discussed in the previous part of this series. These improvements could help the company to minimize its fixed costs involved in vehicle manufacturing on existing models.
On the other hand, Tesla is also ramping up its production facilities to begin producing its upcoming Model 3. Therefore, the high investments required to prepare for Model 3 production could be the primary reason why analysts are expecting Tesla’s 1Q earnings to be weaker than they were last year.
In 1Q17, most of the automakers (XLY) including Ford (F) and Fiat Chrysler (FCAU) reported a decline in their US market sales. However, General Motors (GM), the largest US automaker, managed to report minor gains in its first quarter sales due to higher retail vehicle sales.
Continue to the next part to know what analysts are recommending for Tesla stock ahead of its 1Q17 earnings release.