Tesla Q3 2021 pre-earnings call: what you need to know

By Anna Farley

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All eyes are on the Tesla Q3 results after a record second quarter for the firm. Here's what you need to know about the upcoming earnings report.

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All eyes are on the upcoming Tesla (NASDAQ: TSLA) Q3 results after a record second quarter for the firm.

The electric vehicle (EV) powerhouse, helmed by polarizing CEO Elon Musk, will post its figures for the three-month period after the market closes on 20 October.

And with so much attention now turned towards how the company is growing and what will be coming next, it’s a good time to look at what analysts are expecting and consider whether now is the right moment to invest.

Strong Q3 results likely amid vehicle sales surge

Analyst consensus for Tesla’s Q3 revenue, according to yahoo, stands at $13.37 billion. That would mean a 12% rise from $11.98 billion in Q2 and a 52% increase from $8.77B in the third quarter of 2020. It’s worth noting that the pandemic remained in full swing the year before.

Earnings per share, according to consensus, is forecast at $1.49. This is a slight 3% rise from $1.45 in Q2 and almost twice the year ago EPS of $0.76.

The company already posted its third quarter production and delivery figures in early October. Total production came to 237,823 vehicles, up 15% from Q2. Total deliveries amounted to 241,300 vehicles, rising 20% from Q2.

These sales figures, combined with consensus, suggest strong Q3 results could be just around the corner for the firm.

Investors look to be anticipating a rise as well, with the shares up 6% since October began at $818 as of writing. Year-to-date, shares are up 12%.

However, the stock has been quite volatile in 2021 so far, dipping as low as $563 over fears the company may be overvalued.

Bitcoin boom adds $1 billion to Tesla’s investment

Another aspect of volatility for Tesla is its $1.5 billion Bitcoin investment, announced back in February. At that time, the company said it would begin accepting payment for its products using the cryptocurrency.

In Q2, the firm’s bitcoin investment resulted in a $23 million impairment, as the bitcoin price sank by around 40% in that quarter from close to $59,000 to around $35,000.

The price climbed again in Q3, however, up 19%.

Since then, the price of bitcoin has continued to rise – standing at almost $58,000 at time of writing. At that price, from the time of the February investment, the value of the bitcoin the firm purchased has risen by approximately $1 billion.

Tesla ceased accepting Bitcoin payment in May – with Musk citing concerns over Bitcoin mining’s environmental impact. The news caused the price of the decentralized currency to slump. However, the price spiked in July when Musk said he expected the company to resume accepting the coin in the future.

Musk in July said he would need assurance that at least half of the energy used in mining Bitcoin came from renewable sources and that there was a trend towards an increase.

What the future holds for bitcoin is always uncertain. Still, while Tesla retains its investment, the price will continue to impact the firm for good and ill.

Beyond Q3 – Tesla’s European expansion plans and Roadster

Tesla is expanding beyond the US and into Europe. It plans to build a new plant in Germany – home to famous automakers like Volkswagen (OTCMKTS: VWAGY) and BMW (ETR: BMW).

The goal for the company is to produce up to 500,000 vehicles a year at the plant, known as the Tesla Gigafactory. This will be the first Tesla plant in Europe.

Officials in the country have said they expect to approve the plant – possibly even this year.

However, the Gigafactory is facing objections around possible environmental impacts, including potentially to the water supply.

Those opposing the plant had until 14 October to make their objections, which are now being assessed by the environment agency. If Tesla doesn’t get approval, it will be forced to remove all the buildings already assembled.

Along with the uncertainty around the plant, the company has seen ongoing delays to the second-generation Tesla Roadster, its fully electric sports car and a sequel to the first-generation car produced between 2008 and 2012.

In the firm’s October annual shareholder meeting, Musk revealed that Tesla had pushed back production again to 2023 – yet another delay. The CEO blamed supply chain shortages. Production was originally meant to start in 2021, but was delayed to 2022 and again to 2023.

While the German expansion and eventual launch of the Roadster could prove positive developments in the future, both still remain to be seen.

Is this the time to buy?

It could be that this is a good time to invest, as Tesla’s results may turn out to top expectations – the company’s Q2 results were ahead of consensus, after all.

The bitcoin recovery of late, the new German factory, and the increase in car sales for the quarter already announced could all prove positive catalysts for the firm’s share price.

Conversely, the bitcoin price remains volatile and the German Gigafactory opposition could still pose a threat to production in Europe. Tesla’s shares have also been volatile enough of late that a possible sharp drop could always be around the bend.

There are definitely reasons to consider buying right now, but obviously it’s worth weighing these against the unknowns and risks surrounding the company.

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Topics:
Quarterly Earnings
Automobile Manufacturers
Electric Vehicles
Industries:
Consumer Discretionary
Companies:
Tesla

Author: Anna Farley

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Anna Farley does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Anna Farley has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.