Tesla (TSLA) Rallies Strongly After Earnings Report

Tesla Motors (TSLA) Jumps on Production Outlook Despite Shaky Earnings

Whether or not Tesla Motors (TSLA) missed or beat earnings estimates last quarter depends on which set of analyst estimates you use; the company topped some aggregate estimates, but fell short of others. Either way, investors loved the outlook Tesla Motors offered for the current quarter, sending TSLA shares up sharply in after-hours trading on Tuesday evening and in early trading on Wednesday.

TSLA Weekly Chart

In its third quarter of the year, Tesla lost 58 cents per share on sales of $937 million, though adjusted revenue a- adjusted to reflect lease revenue - rolled in at $1.24 billion. Most pros were looking for a top line near $1.21 billion. The projected per-share loss for TSLA ranged anywhere from only 53 cents per share to as much as  a loss of 60 cents per share. The earned two cents per share in the same quarter a year earlier, when it generated $932 million in revenue.

Tesla delivered 11,603 electric vehicles last quarter (most  of them the Model S), though it made a total of 13,091. Moreover, the company projected it would build between 15,000 and 17,000 automobiles for the current quarter... most of which should be the much-ballyhooed Model X. Tesla said it anticipated total deliveries of between 17,000 and 19,000 electric vehicles in the fourth quarter of 2015.

It was that production outlook that catapulted TSLA shares higher, reversing a downtrend that's been in place since the stock peeled back from an established ceiling at $283. But, even with the surge, Tesla Motors stock remains below its key long-term moving average lines, and still trapped within the confines of a horizontal trading range.

Looking further down the road, Tesla Motors says a combination of greater scale and lower materials costs could expand gross margins to more than 30% within a couple of years, driven by production of both the Model S and the Model X. Over the course of the past twelve months, gross margins have averaged 27%. Even with gross margins in the mid-30% range, however, it's still not clear if Tesla will be GAAP profitable.