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What’s Driving Tesla’s Roller-Coaster Ride after Q4 Results?

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Tesla’s Q4 2018 earnings

Tesla (TSLA) released its fourth quarter of 2018 results after the market closed on January 30. The company’s adjusted earnings for the quarter were at $1.93 per share on a non-GAAP (generally accepted accounting principles) basis, a 33.4% drop from $2.90 in the third quarter and also worse than analysts’ estimates of $2.20 per share. The company’s fourth-quarter GAAP earnings were at $0.78 per share as compared to $1.75 in the previous quarter.

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Tesla’s roller coaster ride

On Wednesday after Tesla announced its fourth-quarter results, its stock settled with gains of 3.8% ahead of its earnings event. After the announcement, the stock (XLY) extended these gains initially after hours despite its earnings miss. The company’s better-than-estimated revenues and its strong Model 3 gross margin could be some of the main reasons for these initial gains. However, these gains didn’t last for long, as its stock fell by 4.5% in extended trading after the company’s CEO Elon Musk announced the departure of Tesla’s CFO Deepak Ahuja.

Tesla stock ended January 2019 with 7.7% losses against 7.9% and 9.7% gains in the S&P 500 Index and the NASDAQ Composite index (QQQ). Interestingly, in January Tesla’s Chinese (MCHI) competitor NIO (NIO) outperformed the market with solid 23.7% gains.

Series overview

In this series, we’ll take a close look at Tesla’s fourth-quarter results including its revenue and gross margin. We’ll find out what factors drove the company’s fourth-quarter results. We’ll also review Tesla’s updates on Model 3 gross margin and its outlook for 2019. At the end of the series, we’ll take a look at what analysts recommended on Tesla stock and explore some important factors that could affect its valuation in the near term.

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