Tesla (TSLA) Reports Earnings | What You Need To Know

Tesla Motors Inc (NASDAQ: TSLA)

As expected, Tesla reported earnings for the third quarter after the closing bell. Unfortunately, earnings weren’t quite as expected. Nonetheless, investors seemed to like something about the report because the stock is climbing after hours. Today, we’ll take a look at the earnings report, look for the positive news in the report, talk about the market reaction and discuss what we can expect to see moving forward. So, let’s get right to it….

Tesla’s Earnings Report Was A Miss

As mentioned above, Tesla reported earnings today, coming in below analyst expectations and proving a relatively large loss. Here’s what we saw from the report…

  • Earnings – Unfortunately, earnings came in lower than analyst expectations. For the third quarter, analysts expected to see a loss of $0.56 per share. However, in the quarter, the company actually reported earnings at a loss of $0.58 per share.
  • Revenue – In terms of revenue, Tesla came in right in line with expectations for the quarter. In terms of revenue, the company reported $1.24 billion for the quarter.

Looking at the data above, there’s not much to be happy about. Essentially, the company hit revenue on the head and came in $0.02 below analyst expectations with regard to earnings. Nonetheless, investors were happy with the report.

Why Investors Were Happy With Q3 Earnings From TSLA

While earnings were a miss, investors are definitely happy. So, what’s causing the excitement? Well, the answer is simple. Tesla recently ventured into a new market, China. China is one of the largest markets in the world for consumer goods. So naturally, if Tesla does well in China, we can expect it to report solid earnings and sales growth in the future. That seems to be one of the factors that is making investors overwhelmingly happy with the stock. According to Tesla, third quarter sales in China increased substantially. In their earnings report, TSLA stated the following…

In China, our newest major market, Q3 Model S orders increased substantially from Q2, due in part to the opening of two new retail locations. We expect order growth in China to remain strong with more store openings and the recent policy changes in Beijing and other major cities that allow buyers of Tesla vehicles to bypass license plate restrictions.”

This statement is important for two reasons. First and foremost, it’s important that Tesla take advantage of their newest market, and it’s clear that the company is doing so based on the “substantial” sales growth. Also, areas that allow vehicles to bypass license plate restrictions are likely going to lead to an increase in sales in the future. All in all, everything seems to point to strong future sales in one of the world’s largest market places.

How Tesla Reacted To The News

While earnings was a miss, the overall report was overwhelmingly positive. So, it would make sense to see a positive reaction. That’s exactly what we’re seeing after hours. Currently (8:41), Tesla is trading after hours at $227.00 per share after a gain of 8.95%.

What We Can Expect To See Moving Forward

While earnings were a bit of a miss, the overall earnings report was positive. Not only is Tesla doing well in China, the company is experiencing increasing shipments that are likely to continue moving forward. As every investor knows, investors ultimately are the primary factor that drives movement in the market. With the positive news, investors are excited about what they can expect to see moving forward. For all of these reasons and more, I’m expecting to see more gains in the future.

What Do You Think?

Where do you think Tesla is headed and why? Let us know your opinion in the comments below.