Stocks rallied on Tuesday after announcing quarterly results faster than expected, fueling speculation that good news is being delivered.
Investors are looking forward to the upcoming quarterly report with even more excitement than usual, as Chief Executive Elon Musk has pledged that Tesla would post a net profit and positive cash flow for the three-month period, based on the belief that Tesla would recoup its losses through recharging could recharge its strong sedan model 3.
Investors had expected results to come next week or later, but Tesla on late Monday said it would release its third-quarter financial report after markets hit Wednesday shut down. Tesla's share price, which fell nearly one-third from its high for the year on Monday, rose nearly 1
"Game theory suggests that early / surprising reporting is good news," Adam Jonas, an analyst for Morgan Stanley, said Tuesday in a note to investors. "Tesla is at the most critical point in the ramp of his flagship product (Model 3), arguably the most critical point of his liquidity / access to capital, as it is a public company. Why should Tesla now introduce negative news on the market? Driving the Market? "
Analysts were generally less confident than Mr. Musk in Tesla's ability to make a profit. According to a FactSet survey, they averaged a net loss of 95 cents per share on average over the last quarter, based on generally accepted accounting principles. This is offset by a loss of $ 3.70 per share in the third quarter of last year. Revenue Expected to Rise from $ 2.98 Billion Last Year to $ 6.1 Billion
Analysts expect Tesla to report an adjusted loss of 3 cents per share over last year's period, compared to $ 2.92 per share a year earlier Reported to FactSet on Tuesday.
If confirmed by Mr. Musk's prediction, it would be the third quarterly net profit in Tesla's 15-year history. Tesla generated $ 22 million in the third quarter of 2016 and $ 11.2 million in the first quarter of 2013. It never reported a profit for the year.
The high stakes for the quarter have been raised by Mr. Musk, whose A number of recent derailments have raised questions about his way of thinking. Above all, he tweeted news on August 7 stating that he had secured funding to take Tesla privately.
The tweets sent stocks that just tumbled when it became clear that a deal was not complete. Mr. Musk has recently clarified the Securities and Exchange Commission's (SEC) claims that his tweets mislead investors. As part of the settlement, he remains CEO, but must resign in the coming weeks as chairman. He may not be chairman for three years. It is expected that Tesla will soon terminate a new chairman and two other independent directors.
Tesla's uproar and Mr. Musk's episodes have helped exaggerate the short sellers' argument and bet their bets.
A turning point for opinions on Tesla, said Ben Kallo, an analyst for Robert W. Baird & Co., on Tuesday in a notice to investors. "While some think it will take several quarters to transform the narrative, we believe that a strong Q3 and a favorable outlook on the conference call should be enough to drive shares higher," he said.
Some long-time bears were already expecting a bounce. Citron Research, which has been trading Tesla for five years and has filed a lawsuit against the company over the go-private tweets, said Tuesday it had changed its view of the automaker, saying its electric cars were "destroying the competition."  Citron cited Tesla's sales performance against competitors' future potential, including plans for Chinese and European factories, a compact SUV model and the production of semi-trailers as reasons to look long term.
Tesla earlier this month said total vehicle shipments in the third quarter reached 83,500, a significant increase of more than 26,150 vehicles a year earlier, thanks to continued production of the Model 3 this summer. It said it delivered 55,840 model 3s in the period. The vehicle, which is less expensive than other Tesla models, is the cornerstone of Mr. Musk's bet to turn Tesla from a niche luxury brand into a mass-produced vehicle manufacturer.
Delays in achieving production targets for Model 3 have increased Tesla's limited printing cash, which raises some concerns about the automotive company's financial prospects.
Many analysts expect Tesla to raise more money to support its growth plans. But Mr. Musk has said that he does not want to and says the model will generate 3 funds. Investors on Wednesday will focus primarily on Tesla's ability to generate cash and any leadership for fourth-quarter Model 3 production.
On average, the surveyed analysts expect Tesla to deliver 66,400 model 3 in the current period. The company has already stated that 8,048 small sedans were on the road at the end of the third quarter and are expected to be delivered in the fourth quarter, suggesting that analysts expect Tesla to build at least about 58,000 models in the quarter.
Write to Tim Higgins at Tim.Higgins@WSJ.com