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Tesla Inc (TSLA) Stock Will Hit $300 After Q4 Earnings

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Electric vehicle company Tesla Inc (NASDAQ: TSLA ) is scheduled to report fourth-quarter fiscal 2016 earnings results after the closing bell Wednesday. With TSLA stock driving to all-time highs, investors are looking for confirmation that Tesla - as a company - is heading in the right direction.

The New Star of Tesla Inc (TSLA)? Model Y (Says Morgan Stanley)

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For the record, analysts expect the Palo Alto, California-based company to lose 43 cents per share, narrower than the loss of 87 cents last year.

Tesla, which has alternated between beating and missing estimates, posted a surprise profit for the third quarter. Revenue is expected to be $2.19 billion compared to revenue of $1.75 billion a year ago.

My GPS has already forecast a higher price for TSLA stock following the result, but the Tesla earnings numbers - to be reported Wednesday after the bell - won't be the reason.

The Real Driver for Tesla Stock

TSLA stock has gone on a strong run, surging more than 60% in 12 months, mostly in anticipation of positive results for the quarter.

Beyond the top- and bottom-line numbers, however, Tesla stock will move based on the details the company provides about its new Model 3 - the company's all-electric mass-market vehicle that CEO Elon Musk hopes to start producing in July and selling next year. Competing with Ford Motor Company (NYSE: F ) and General MotorsCompany (NYSE: GM ) has been a major goal for Musk.

What's more, Musk hasn't lowered expectations. The company still plans to ramp up vehicle production to a rate of 500,000 vehicles in 2018, which Tesla stock analysts consider highly ambitious.

And much of the production goals depend on the success of the $35,000 Model 3, where investors' focus has shifted to over the last three months since the company reported disappointing vehicle deliveries.

Tesla knocked out the shorts earlier this month as the company announced that its California plant would be prepped this month to start building Model 3s, and that full-scale production should begin by July. That lined up with Tesla's previously announced timeline - and a lack of delays sent TSLA shareholders into a frenzy .

Bottom Line on TSLA Stock

Beyond the Model 3 and vehicle production targets, TSLA's need for cash will be another major factor on the conference call with analysts.

Although Musk stopped short of promising to raise cash in the third-quarter conference call, Musk didn't shoot down the idea either, saying he would consider it if market conditions were right.

Likewise, analysts will pay attention to estimates of how much cash the company expects to burn through in the quarters ahead.

"Everything seems to be going according to plan regarding the car, but analysts will want to hear more details about ramp-up expenses," said Bill Selesky , an analyst with Argus Research.

Not to mention, there's the issue with absorbing the SolarCity business, which generated substantial losses before TSLA brought it into the fold. Worries about how much SolarCity would weigh down then-Tesla Motors caused shares to drop more than 20% between the Aug. 1 buyout agreement and the early December lows.

Still, to the extent Tesla can lower production-cost estimates for the Model 3, while maintaining its production targets, TSLA stock should reach $300 in the next three months. That'd be another 8% on top of its already all-time high price.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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