What to Watch – The Crazy Motley

Mark your calendar. With only two days notice, an electric car company You're here (NASDAQ: TSLA) released the date of its third quarter earnings call Monday night. The report is expected after market close on Wednesday.

Investors and the media will closely follow the quarterly update. Tesla was primarily looking to become profitable for its third quarter – a significant change from the company's $ 743 million in the second quarter.

Prior to the release of Tesla's third quarter results, here is an overview of what investors should watch for Wednesday.

Model 3. Image Source: Tesla.

Earnings per share

At the beginning of its second quarter, Tesla's priorities were to increase the production and deliveries of its model 3 sufficiently to enable it to realize cost savings that would allow it to become profitable. In its letter to shareholders in the second quarter, Tesla said it hoped to achieve GAAP profitability in Q3 and Q4.

To become profitable, Tesla said that the production of Model 3 in the third quarter should be between 50,000 and 55,000 units and deliveries of Model 3 "exceed" this level. Tesla already announced model 3 production and shipments for the period earlier this month, with third-quarter model 3 production and shipments of 53,239 and 55,840 units, respectively.

Data source: Tesla second quarter vehicle delivery update. Graphic by author.

Achieving its model 3 production and delivery goal does not guarantee profitability in the third quarter, but justifies it.

Cash and cash equivalents

Another key investor investors will want to watch when Tesla reports its third quarter results is its cash and cash equivalents. With the ramp-up of Tesla's capital-intensive Model 3, the company's cash and cash equivalents increased from $ 3.4 billion at the end of the fourth quarter of 2017 to $ 2.2 billion at the end of the fourth quarter of 2017. end of the second quarter.

For its third quarter, Tesla expected improved production and deliveries of Model 3 would help reverse the trajectory of the builder's cash and cash equivalents. With model 3 shipments up 203% sequentially, investors will see whether such a disturbing increase in vehicle deliveries is paying off if the cash flow situation improves.

Orientation

Finally, it will be helpful to give Tesla's advice.

First and foremost, investors should look for a direction of Tesla's profitability and positive cash flow in the fourth quarter, as model 3 output and deliveries are expected to continue to grow over the period.

But investors should also look at the company's outlook for vehicle delivery. Although the production of Model 3 has risen sharply recently, management expects to be able to produce and deliver 10,000 models 3 a week, a leap from the rate of 5,000 units per week for which the company completed its third quarter. . Expect Tesla to guide you for a significant increase in the number of model 3 deliveries in Q4 – somewhere in the order of 65,000 units or more.

Tesla reports third-quarter financial results after market close on Wednesday, October 24.