Tesla Reports Soon: What to Watch in Its Q1 Financials

Tesla's first-quarter deliveries weren't as bad as some had feared. Its full quarterly results will show how the coronavirus has impacted the company.

Tesla pulled off something few other stocks did last quarter. 

The company's shares gained 25% during Wall Street’s worst quarter in history, even as Tesla was dogged by questions around how coronavirus would damage its business model.

The carmaker plans to report its full first-quarter results on April 29, and investors are looking for signs that the company can shake off supply and demand disruptions triggered by the coronavirus pandemic. Tesla  (TSLA) - Get Report shares closed up 2.8% at $729.83 on Wednesday.

On average, analysts polled by FactSet are expecting Tesla to post a non-GAAP loss of 25 cents per share on $6.16 billion in sales. 

1. Full Year Deliveries

Tesla shares got a boost when the carmaker reported that it delivered 88,400 cars in the first quarter, a better result than many analysts had feared. The coronavirus pandemic had sunk demand and disrupted production in China, and its Fremont, Calif.-based factory was also shuttered during the last week of Q1. Given the difficult circumstances, Tesla’s 88,400 Q1 deliveries came as welcome news. But the full-year delivery outlook is less clear. 

The carmaker set an original full-year delivery target of 500,000, and has not updated or revoked that figure since coronavirus hit. With additional damage ahead in Q2, that full-year target is a “virtual impossibility,” according to Wedbush analyst Dan Ives. Investors will be seeking further detail on whether that goal remains viable.

2. Cash Flow

With its Fremont factory closed for at least another few weeks, Tesla has been taking steps to curb expenses. The company sought rent reductions from some of its landlords, The Wall Street Journal reported, and has laid off, furloughed or enacted pay cuts across much of its workforce. When Tesla reveals its latest results and guidance, investors will get a clearer picture of whether those measures are enough to keep the balance sheet healthy in the face of restricted supply and sinking demand.

Credit Suisse estimated this week that Tesla is burning cash at the rate of $300 million per week because of the shutdown at its Fremont, plant. And with new vehicle production stymied until the plant is permitted to re-open -- that would be May 4 at the earliest -- management could say more about what the shutdowns mean for Tesla’s budget.

3. Demand Outlook

The pandemic has sent demand for a wide range of consumer products off a cliff, not just cars. And no one knows exactly when consumer demand will return to pre-coronavirus levels. When it comes to Tesla, some analysts see the carmaker in a uniquely strong position in the EV market once the pandemic is under control.

In a recent note, Credit Suisse raised its price target for Tesla to $580 from $415 on the notion that it has more “edge” in the EV market long term: “Coronavirus disruption will make it more difficult for legacy automakers to balance the long-term shift to EV in the face of near-term cycle disruption,” analyst Dan Levy wrote. In its earnings report next week, investors can expect further commentary on the demand outlook this year and beyond. 

Note: A previous version of this story incorrectly stated that Tesla was due to report earnings on April 22.

StreetLightning Videos With Jim Cramer: