Why Tesla stock popped before earnings

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Electric cars giant Tesla (NASDAQ: TSLA) is set to report earnings after close of trading tomorrow, Wednesday, April 20.

Even before the news is out, however, Tesla investors are taking a victory lap today, and Tesla stock is up 2.4% as of 12:05 p.m. ET as investors begin to place bets on what the news will hold. 

So what

Wall Street is of two minds about what Tesla will report tomorrow. On the one hand, Tesla perma-bear Gordon Johnson at GLJ Research is warning that Tesla’s operating cash flow is going to come in only half as strong as the $2.3 billion that other analysts have forecast, sending Tesla’s stock price plummeting tomorrow afternoon. On the other hand, Credit Suisse is raising its Tesla price target to $1,125 on the theory that earnings calculated according to generally accepted accounting principles (GAAP), at least, will be better than others expect.

(Credit Suisse sees earnings coming in at $2.56 per share, versus the $2.26-per-share consensus, reports TheFly.com.)

Now what

Whether Tesla beats or misses the precise numbers that analysts are forecasting for tomorrow, however, here’s what you should actually be focusing on:

Chinese news agency Xinhua reported this morning that at long last, Tesla has resumed car production at its Shanghai factory. The reopening is going slower than predicted, however, and Tesla apparently won’t be up to running even one full shift (out of four total shifts in a week) until the end of this week.

Still, the restart is happening, and that means that Tesla is getting back on track toward its goal of producing 1 million electric cars globally this year. With Shanghai alone able to cover nearly half that number, restarting production there is absolutely crucial to Tesla’s success in hitting its goal this year. Expect Tesla to update investors on the status of its restart tomorrow and to confirm or deny that it can still reach its target after losing three full weeks (and counting) of production capacity in China.  

In the long term, those three weeks will probably dwindle in significance. In the short term, however, whether Tesla is forced to move the goalposts for 2022 could have a marked affect on the stock price this week. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock popped before earnings appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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