Tesla Q3 earnings: Why Tesla bumped earnings up

Checking out a Tesla.Reuters/Jason Lee

• Tesla will report Q3 earnings on Wednesday, ahead of schedule.
• Tesla could come close to posting its first quarterly profit since Q3 of 2016.
• Revenue should surge to a record level for the quarter.

Tesla announced late Monday that it would report third-quarter earnings after the bell on Wednesday. That’s earlier than anybody expected — Q3 numbers were anticipated for the first week in November — so we can read two things into the abrupt advancement of the usual timetable.

A consensus of analysts surveyed by Bloomberg figured Tesla will report close to break-even for the quarter: a loss of less than ten cents per share, versus a loss of $2.45 in the same period last year, on revenue of nearly $3 billion.

The first possibility is that Tesla did indeed lose money for the quarter, perhaps on much-increased revenue thanks to deliveries of its Model 3 sedan. So the company just wants to get the information out there and move along, given that CEO Elon Musk had predicted profits for the second half of 2018. Hello, fourth quarter!

Markets Insider

Up to this point, the markets weren’t really pricing in anything drastically positive: Tesla was at $263 on Tuesday at the open, down over 17% for the year and well off its prior highs. But shares quickly jumped 5%, to $274. 

The second possibility is that Tesla wants to get the modest-lost/break-even/near-profitable story out there and set the stage for an actual profit in Q4. In any case, revenue is likely to surge, potentially up more than $2 billion for the quarter, a massive increase from Q3’s $4-billion total. 

One interesting factor to consider, given the markets’ prior wait-and-see stance, is that profitability for Tesla might be less important for investors than execution in the business, which would lead to the sort of growth that has given Tesla a $40-plus-billion market capitalization even as it builds and sells relatively few vehicles. 

Regardless, if Tesla does need to raise money in 2019, keeping a floor on its stock price of around $250 would be beneficial; that’s roughly where the company had raised in the past.

Get the latest Tesla stock price here.