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3 Important questions to consider before Tesla (NASDAQ: TSLA) reports first quarter revenue



The stage is yours, Elon.

Tesla Inc. (TSLA) generally publishes a report with sales figures for the last three months within the first five days after the end of the quarter. The report, which normally only issues the units sold, is likely to be around April 3, both Tesla stock analyst Anton Wahlman and Nomura Instinet analyst Romit Shah.

While there may be limited commentary, the report is mostly Tesla's agent of "Dangling the Carrot" an optimistic development to fondle Wall Street's favor, according to Wahlman.

Here's what Tesla followers should look for in the report.

Can Tesla reach its goals?

The most glaring case of Tesla's shortcomings is the Model 3. On several occasions, Tesla has missed the mark of overthrown production targets. "It was a joke when it came to rolling off the assembly line," Wahlman says about the model 3 ramp.

Tesla wrote in an 8K filing on February 8 that it would continue to produce weekly of the Model 3 target from 2500 to the end of the first quarter. The company added in February that it was targeting a weekly production rate of Model 3 of 5,000 by the end of the second quarter.

But Tesla also offered this sewage treatment plant in the 8-K: "It's important to note that these are the stages. We focus on hitting and we have plans to achieve these." Our earlier experience with the ramp of the model 3 has shown how difficult it is to accurately predict specific production rates at specific times. "

Given Tesla's guidance, the most conservative estimate for Model 3 sales in the first quarter is about 1

8,000, Wahman says. It is worth noting that some of these sales are still delivered to trucks and not to customers. This means that the deliverables could be closer to around 14,000, Wahlman explains.

According to FactSet, Wall Street expects Tesla to deliver 38,000 units in the first quarter, of which 13,800 are expected to be model 3.

  The Tesla Model 3
The Tesla Model 3

"We also recognize that there is an increased risk for Tesla's 1Q Production Manual of 2,500 units per week in March," Shah wrote. "As a result, we continue to see risks to our 1H18 supply estimates."

The Bloomberg Model 3 Production Tracker, which is based primarily on crowd-sourced information and VIN registrations, estimates that Tesla will make 1,076 model 3 units per week as of March 29.

"It will be very difficult for them to declare a figure lower than the last quarter, "says Wahlman, as management indicated strong and growing demand earlier in the year. "If your business does not run in absolute numbers, somebody will not be happy."

"So far, this cat has nine lives," Wahlman thinks. Investors have made tremendous progress and offered Tesla a number of second chances. "They always exaggerate their prospects," Wahlman adds. "The question is how big the discount must be."

What about financials?

It is also worth noting that Tesla's growing debt problem is increasing. Tesla had $ 7.6 billion in debt last year, 31% more than a year earlier.

For the year 2017, Tesla delivered 103,000 units. This means that the company has approximately $ 73,786 in debt per delivered car. The same level for General Motors Co. (GM) is only $ 16,366 and for Volkswagen (VLKAY) it's $ 18,495.

Because of this huge debt accumulation and a failure to make any net income, the only way Tesla can remain a competitor in the car room would be to file a debt for the stock exchange, Wahlman thinks.

"It really takes the knife off the business," says Wahlman.

Or, as Chris Nolter of TheStreet writes, Tesla is testing the debt market for much-needed money.

How much is the Musk brand really worth?

"The stock is so tied to the personality of the Elon Musk cult," says Wahlman. It is considered a substitute for the Musk brand, not as an indication of the value of ownership in the company.

For example, Tesla's shares shot up 5% in mid-March when Musk and his brother Kimbal stepped south through the southwest. The two talked little about Tesla, but their vivid commentary on the colonization of Mars and the establishment of a hyperloop sufficed to support the optimism in the Musk brand – and thus in Tesla.

"If he's out of the company in any case," says Wahlman, "that thing would collapse like a pancake."

"Elon Musk is an accomplished inventor, inventor, and engineer, but unlike other CEOs He does not go for business first, "said Robert Johnson, President and CEO of the American College of Financial Services, by e-mail.

"He's less interested in profit and loss, but he's interested in transformative innovation," Johnson said. "The world needs transformative innovation, but investors are interested in sustainable business models."

Time will tell if Tesla can keep its high promises. For now, Wall Street has closely watched Tesla. Shares have fallen 7.3% last year

Before you go

Despite recent fatal accidents involving driverless cars by Tesla and Uber, BlackBerry (BB) CEO John Chen tells TheStreet Executive Editor Brian Sozzi are autonomous rides still the future. See below.


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