Tesla 3Q Preview: Earnings Could Show First Quarterly Sales Decline In 7 Years

 | Oct 23, 2019 14:59

* Reports 3Q 2019 results on Wednesday, Oct. 23, after the close

* Revenue expectation: $6.47 billion

* EPS expectation: ($0.45)

Tesla (NASDAQ:TSLA) has been fighting a tough battle, attempting to turn around the negativity that has blighted its shares for months and cast dark shadows over its once-glittering future. When the pioneering maker of electric cars reports its third-quarter earnings today, it has to prove that it’s winning the struggle.

The biggest challenge for the company’s ambitious but controversial CEO, Elon Musk, is to show the company can make profits that are sustainable, when car sales are improving.

Earlier this month, Tesla reported that it delivered a record 97,000 units in 3Q, including 79,600 Model 3 sedans, plus 17,400 of the more expensive Model S cars and Model X crossovers. The company's statement didn’t mention whether it’s still expecting to deliver the 360,000 to 400,000 vehicles it had predicted for this year. It will need to sell an additional 105,000 cars in the last three months of the year to hit the low end of that forecast.

But the encouraging October delivery report also had bad news hidden in it. Many analysts believe that more sales of the lower-priced Model 3 sedans have most likely hurt revenue in the third-quarter, making Musk’s goal of achieving profitability more elusive. Model 3 sedans, which start at $38,990 in the U.S., are less than half the cost of the cheapest Model S or X.

h2 Shares Under Pressure/h2

These concerns have kept Tesla stock under pressure throughout the year. It’s down about 25% for the year to $255.58 at yesterday's close, but it has recovered almost half of its losses since June when it was trading 46% lower.