Tesla Reports Earnings on Wednesday: 5 Important Things to Watch

Commentary about deliveries expectations, Model Y demand and Chinese Model 3 sales are among the things to watch as Tesla reports.
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Though its U.S. auto production has been halted for the last month, Tesla  (TSLA) - Get Report has more than doubled from its March low, and is now up 90% on the year.

That spells higher expectations for Tesla, which just asked some of the employees at its massive Fremont, Calif. plant to return to work soon. Currently, the consensus among analysts polled by FactSet is for Q1 revenue of $6.11 billion (up 35% annually), GAAP EPS of negative $0.90 and non-GAAP EPS of negative $0.27.

Tesla’s Q1 vehicle deliveries were shared on April 2. Elon Musk’s company said it delivered 88,400 cars in Q1, with the Model 3 and Y accounting for 76,200 of the deliveries and the costlier Model S and X accounting for 12,200.

Here are a few things to keep an eye on as Tesla reports on Wednesday afternoon and hosts an earnings call at 6:30 P.M. Eastern Time.

1. Deliveries Guidance and Commentary

In January, Tesla reported 367,500 2019 deliveries and forecast its 2020 deliveries “should comfortably exceed” 500,000. That, of course, was before the COVID-19 pandemic began impacting both vehicle production and demand.

Like many other firms, Tesla might withdraw its full-year guidance, given how little visibility there is right now about second-half demand trends. But even if that’s the case, the company could still share some qualitative commentary about demand trends and its near-term deliveries expectations.

2. Cash Burn

Between the Fremont shutdown and COVID-19’s impact on demand and deliveries fulfillment, odds are good that Tesla’s cash flow is negative right now. Fortunately, the company likely had over $8 billion in cash going into March, following a $2.3 billion February stock offering.

The consensus is for Tesla to post Q1 free cash flow (FCF) of negative $329 million, following positive FCF of $1.01 billion in Q4.

3. Chinese Model 3 Demand

From the looks of things, Tesla has sold a decent number of Model 3 units in China since its Shanghai plant (shuttered for only two weeks in Q1) began production in late 2019. Any comments that the company shares about near-term Chinese demand trends will get attention.

Potentially impacting Q2 demand a bit: Tesla just hiked its Chinese Model 3 prices in response to Beijing cutting electric vehicle subsidies by 10%.

4. Model Y Commentary

Tesla began delivering the Performance and Dual-Motor All-Wheel Drive versions of its Model Y crossover in March, sooner than originally planned. The company has also told some reservation holders for the cheaper, Long Range Rear-Wheel Drive version of the Model Y to prepare for deliveries.

With Tesla choosing to group Model Y and Model 3 deliveries and production together, look for the company to field a question or two on the call about its 2020 expectations for Model Y demand and production in particular.

5. The Solar and Energy Storage Businesses

Tesla forecast in January its solar and energy storage deployments would each “grow at least 50%” this year. Like its deliveries guidance, it wouldn’t be surprising to see these outlooks withdrawn as opposed to revised.

The consensus is for Tesla’s Energy Generation & Storage revenue to be up 21% annually in Q1 to $393 million. In late March, Tesla announced that its NY solar panel plant would be retooled to make ventilators in partnership with Medtronic  (MDT) - Get Report.