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Tesla Seeking Reprieve From Wall Street Ahead of Earnings

Oct. 24, 2018
Despite recent shenanigans, the automaker might actually show a profit this quarter.

After months of production “hell,” then a period of mayhem involving Elon Musk, Tesla Inc. may finally be entering a new era—one in which it makes money.

The electric-car maker is approaching its earnings report Wednesday with much of Wall Street suddenly gushing with enthusiasm about its prospects. Musk, who’s said he’s comfortable predicting that Tesla will post profit and positive cash flow every quarter going forward, excited investors by hastily scheduling the release of results earlier than expected and with just two days’ notice.

Tesla rose as much as 3.5% in early New York trading Wednesday, before reversing gains, a day after after surging 13% on speculation that Musk was in a hurry to share good news. The stock also got a boost from Citron Research’s Andrew Left—a vocal, long-term critic who had been shorting the shares—announcing that he had changed his view. He’s now long on the company, saying it’s hitting stride with Model 3 production and snagging customers from the likes of Mercedes and BMW.

“When he says they’re going to be cash-flow positive, possibly this quarter, I’m not going to doubt it,” Left said of Musk on Tuesday in a Bloomberg Television interview.

When Musk was making “a sideshow of himself” in recent months, Left said it distracted him and others from an underlying business that’s turned a corner. The Tesla chief executive officer failed in his short-lived bid to take the company private, and agreed in a settlement with the Securities and Exchange Commission to relinquish the role of chairman.

Tesla delivered 83,500 vehicles in the third quarter, with many of those being higher-priced models. In an email to employees on Sept. 30, Musk said the company was “very close to achieving profitability and proving the naysayers wrong.”

Some bears are now conceding that it’s likely that Tesla earned a profit last quarter—a rare feat for the company.

“We fully expect that Tesla has found a way to show a profit for the third quarter and would be very surprised if they don’t, given the hoops they jumped through to do so,” David Kudla, chief investment strategist for Mainstay Capital Management, who’s bet against the company, said in a note Tuesday. “Tesla must go back to the capital markets for money, but maybe they want to get a profitable quarter on the books first.”

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