Tesla's Q3 Results Lead FBN To Retain Outperform On Stock

Although Tesla Motors Inc (NASDAQ: TSLA) marginally missed revenue expectations for Q3, earnings came in significantly ahead, driven mostly by opex management.

FBN Securities’ Shebly Seyrafi retained an Outperform rating with a $260 price target.

Tesla reported deliveries at 24,807, broadly in-line with the 24,500 guidance, and projected a similar amount in Q4.

“Gigafactory construction and Model 3 development are on plan to support volume Model 3 production and deliveries in FH2 2017,” Seyrafi wrote.

Tesla’s plans for a $5 billion battery gigafactory in the Nevada desert were met with widespread doubts.

The company reported revenue of $2.30 billion, representing 85 percent year-over-year growth, albeit missing the consensus expectation of $2.33 billion.

Tesla’s deliveries grew 114 percent year-over-year and 72 percent sequentially in the quarter. The company produced 25,185 vehicles, up 92 percent year-over-year and 37 percent sequentially.

Non-GAAP opex of $470.5 million was lower than the FBN estimate of $561.8 million.

“So the opex beat was the key source of the EPS beat,” Seyrafi pointed out.

Tesla maintained its guidance at ~50,000 new vehicle deliveries in the back half of 2016. The company plans for Q4 deliveries of merely 25,000.

“About 30-35% of the FQ4 deliveries are expected to be accounted for as leases for revenue recognition purposes,” the analyst mentioned.

The automaker had announced earlier this month that all-new vehicles would have full self-driving capability.

On Friday, Tesla and SolarCity Corp (NASDAQ: SCTY) unveiled roofs integrated with solar panels, along with new versions of its batteries for buildings and the power grid. Tesla is also in the process of acquiring SolarCity.