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Tesla Q4 2019 Earnings Call: TSLA Analysts Raise their Estimates

by Claribelle Deveza January 29, 2020

Tesla-Q4-2019-earnings-call-TSLA-analyst-estmates.jpg

Tesla’s Q4 2019 earnings call is near, and TSLA analysts are raising their estimates. In general, TSLA analysts (TSLA: NASDAQ)—both bear and bull alike—seem to have a positive outlook about the upcoming earnings call. Positivity from the majority of analysts is rare for TSLA stock and maybe a nice change of pace for bulls. However, raised estimates also increased the probability of disappointment, which may be just what the bears want.

Recently, Tesmanian writer Christopher Larson reported that TSLA stock traded at US$563.43 per share as of 2 pm EST today. Larson compared TSLA stock to the S&P 500, which weighed in at US$3,279.98 and was up 1.17 percent.

Tesla stock has been rising since mid-December 2019. During the holidays, it reached the famed US$420 price point and has continued to rally ever since, surprising both TSLA bears and bulls alike. Due to its meteoric ascent, analysts have raised their estimates leading up to Tesla’s Q4 2019 earnings call, based on Zacks consensus estimate of US1.62 per share.

TSLA-420-Elon-Musk-Tesla
Credit: NASDAQ

Zacks investment research reported that the most accurate estimate for TSLA was US$1.67 per share, which means the EV maker’s stock earnings ESP was +3.34 percent ahead of the earnings call. Zacks gave Tesla stock a Rank #2 (Buy) ratings and predicted a positive ESP. According to the investment research company, positive ESP readings for a stock usually do well.

“Our recent 10-year backtest show that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns.”

Zacks predicted that Tesla could beat earnings estimates, and Morgan Stanley seems to agree. The investment bank and financial services company stated that Tesla could surpass EPS estimates in a recent note to clients. Morgan Stanley further expects Tesla to report a Q4 EPS of US$0.88 on a GAAP basis and a US$7.31 billion revenue during its next earnings call.

TSLA-EPS-Zacks
Credit: Zacks

Morgan Stanley predicted that Tesla would achieve its first full year of GAAP profitability in 2020 if it ramps Gigafactory 3 production. In a previous interview with Tesmanian, Ross Gerber from Gerber Kawasaki stated that Tesla would need to make money for four quarters straight to be added to the S&P 500. If Morgan Stanley’s predictions are anything to go by, 2020 may be the year Tesla joins the iconic index.

However, higher estimates are not all chocolates and rainbows, since there is more risk for disappointment. Analysts subtly raised their forecasts for Tesla before the release of the company's Q2 2019 production and delivery report as well. Propelled partly by a leaked Elon Musk email then, the raised estimates led to disappointment and a dip in TSLA stock. With the CEO being quite silent on Twitter and with no leaked email from Tesla this time around, however, analysts have to base their predictions and estimates on information currently at hand. At this point, only accurate information from the earnings call can genuinely tell if Tesla beats estimates or not.

Featured Image Credit: Tesla

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