Updated from 9:54 a.m. to include thoughts from S&P analyst.
Tesla shares were trading up 3.7% in early trading Friday, to $231.57.
Tesla noted that -- provided there are no serious macroeconomic shocks and it continues to execute -- it should have an annualized delivery rate of more than 100,000 units by the end of next year, according to CEO Elon Musk. That 100,000 run rate includes both the Model S and the Model X, which is schedule to be produced in the spring of 2015.
On Tesla's second-quarter conference call Thursday, Musk said he expects the split to be about even for both X and S demand, with perhaps it being slightly tilted toward the X.
"My guess is we'll actually see slightly higher on the SUV side," Musk said, when referring to how the 1,000 unit run rate will go. "I think the Model X is going to a phenomenal car."
Musk also noted that in the past, Tesla has shown all its cards, but that is no longer the case. "In the past we've shown all of our cards, so people have kind of gotten used to us showing all of our cards," Musk said on the call. "We're not currently showing all our cards."
For the second quarter, Tesla earned an adjusted 11 cents a share on $858 million in revenue, as it delivered 7,579 vehicles. The company noted it produced 8,763 vehicles during the quarter, as it begins to make way for the Model X, which is coming in the spring of 2015. Tesla noted it would be on track for more than 35,000 deliveries in 2014. Non-GAAP automotive gross margins were 26.8%, and 26.9% on a GAAP basis.
Analysts surveyed by Thomson Reuters were expecting the company to earn 4 cents a share on $810.57 million in revenue for the second quarter.
For the third quarter, Tesla said it plans to produce about 9,000 cars. "If we had been able to avoid this production down time, we would have been able to forecast Q3 quarterly production at about 11,000 units," Musk wrote in the letter to shareholders. "After considering our planned production and the need to have more vehicles in transit (including the new RHD models), we expect to be able to deliver about 7,800 Model S vehicles in Q3. Without the planned factory retooling shutdown, Q3 delivery expectations would have been approximately 9,500 vehicles."
The company also gave an update on its Gigafactory, which will help the company produce around 500,000 cars a year by 2017.
"In June, we broke ground just outside Reno, Nevada on a site that could potentially be the location for the Gigafactory," CEO Elon Musk wrote in the letter to shareholders. "Consistent with our strategy to identify and break ground on multiple sites, we continue to evaluate other locations in Arizona, California, New Mexico and Texas. The final site for the first Gigafactory will be determined in the next few months, once we have full visibility and agreement on the relevant incentives and processes for enabling the Gigafactory to be fully operational to meet the timing for Model 3."
Following the report, analysts were pretty bullish on Tesla's guidance for the rest of the year. Here's what a few of them had to say:
UBS analyst Colin Langan (Neutral, $230 price target)
"TSLA reported Q2 EPS of $0.11 above consensus of $0.04. Although TSLA's Q3 guide was below consensus largely due to the Q3 downtime, management was notably upbeat on the call. There were three key highlights: 1) TSLA expects to exit 2015 at a 100k production run rate, 2) there are more product surprises in the future, and 3) Musk would be disappointed if TSLA fails to achieve $100/kWh in 10 years. Given the timing of Model X & 3 are known, we expect the product surprises, which has been driving higher R&D and capex, may be related to stationary storage opportunities. We are skeptical of management's comments on achieving a $100/KWh battery cost as this may be below the raw material cost in the battery. We expect a mixed reaction as the weak Q3 outlook is likely mitigated by excitement around potential future products."
JPMorgan analyst Ryan Brinkman (Neutral, $170 price target)
"Looking ahead, TSLA guided 3Q deliveries to substantially below JPM (7,800 vs. JPM 10,200 vehicles), which was not yet updated for the recent announcement of a temporary shutdown of the firm's Freemont facility for investments in increased automation and capacity scheduled for 3Q. However, lower deliveries in 3Q are expected to be offset by higher deliveries in 4Q, as the firm continues to guide to full year deliveries of more than 35,000 vehicles. TSLA also guides to another sharp sequential increase in operating costs (both R&D and SG&A) in 3Q to support the upcoming Model X launch. Our 3Q EPS estimate moves to $0.03 from $0.42 prior on the near-term deliveries headwind, while the same factor benefits 4Q ($1.00 vs. $0.63 prior). Although our 2015 EPS is unchanged on the balance of both higher costs and higher average selling price, our out-year forecasts rise modestly on higher volume expectations for the Model X after management asserted that order trends indicate that demand for Model X will be at least as strong as for the Model S, and added that pricing will be similar to the Model S rather than materially higher (as we had earlier feared). Our December 2014 price target rises to $170 vs. $163 prior on our higher estimates."
Deutsche Bank analyst Rod Lache (Hold, $220 price target)
"Tesla reported solid Q2 results with adj EPS of $0.11 vs. our $0.01 est and consensus of $0.04. Overall, we felt that there were three key takeaways from results: 1) Management indicated that demand continues to outpace (rising) supply, and this situation is not likely to change any time soon as Tesla launches the Model X SUV, and the company increases distribution over time. 2) The company's growth trajectory (in 2015, 2016, 2017) suddenly appears to be much steeper than we anticipated. 3) Possibly the biggest was that Tesla believes battery pack costs can fall below $100/kWh in 'much less than 10 yrs'."
Morgan Stanley analyst Adam Jonas (Overweight, $320 PT)
"The company reiterated its full year target of at least 35,000 units which somewhat surprises us to the positive side, implying around 13,000 units of 4Q deliveries (52,000 annualized rate). It appears Tesla's run-rate of production and deliveries is at least 1, if not 2 full quarters ahead of our expectations before the quarter. Adding to this, the company added a new forward year target of a run-rate of at least 100,000 units by the end of 2015, a figure nearly 25% above our FY volume forecast of Model S and X (combined) for 2016."
S&P Capital IQ analyst Efraim Levy (Hold, $245 PT)
"We raise our 12-month target $45 to $245, or 74X our '15 EPS est. of $3.33 (upped $0.32). We trim our '14 est. $0.04 to $1.15. Our P/E target is about 1.1X expected 66% 5-year compound annual EPS growth. Despite softer than expected Q3 production guidance due to temporary transition issues, we think TSLA is on-track to execute its plans. The pact with Panasonic positions TSLA to make critical battery costs reductions, but risks remain. Posts adj. Q2 EPS of $0.11, vs. $0.20, above our $0.07 estimate and the $0.04 Capital IQ consensus, on better-than-expected margins."
--Written by Chris Ciaccia in New York
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