Recap of 3Q17 earnings
In 3Q17, Tesla (TSLA) reported a massive adjusted net loss of $2.92 per share on a non-GAAP (generally accepted accounting principles) basis and a GAAP net loss of $3.70 per share. These results were much worse than analysts’ estimates of a non-GAAP loss of $2.26 per share. In 3Q16, the company reported a GAAP net profit of $0.14 per share.
Tesla’s worse-than-expected earnings triggered a negative reaction on Wall Street as its stock fell 3.1% on the day of its 3Q17 earnings release.
Analysts expect Tesla’s 4Q17 earnings to be in the negative territory and its net loss to widen further. According to estimates, the company is likely to report a non-GAAP loss of ~$3.10 per share for the quarter. These expectations are worse than TSLA’s reported loss of $0.69 in the same quarter of 2016.
In 4Q17, Tesla’s car deliveries rose ~14.3% on a quarter-over-quarter basis, but its production fell 3.0% quarter-over-quarter. Tesla is a fairly new entrant in the automobile industry (XLY) compared to other legacy auto companies such as Ford Motor Company (F), General Motors (GM), and Fiat Chrysler Automobiles (FCAU). In the case of Tesla, investors must pay attention to quarter-over-quarter growth along with year-over-year growth.
The company’s expenses could rise in order to increase production of the Model 3. These higher expenses could hurt Tesla’s fourth-quarter earnings.
Read on to the next article to learn about analysts’ recommendations for Tesla stock ahead of its 4Q17 earnings release.