The Tesla Motors Inc. (Nasdaq: TSLA) stock price jumped 7% in after-hours trading today (Wednesday) after the company beat Q3 earnings estimates.
The company reported earnings per share (EPS) of $0.02. That translates to net income of $3 billion. Analysts had been predicting a loss of $0.01 per share.
Revenue was $932 million for the quarter, which was up 55% from the previous year. Analysts predicted revenue $889 million.
TSLA stock is always volatile after earnings, and today is no exception. The stock had dipped 3.3% Wednesday and closed at $231.16. But TSLA immediately surged just minutes after the report was released.
While the EPS and revenue beats sent TSLA shares higher, the company actually missed on three critical figures in today's report. Here's a look...
TSLA Stock: Today's Three Earnings Misses
Tesla Earnings Miss No. 1: One of the biggest numbers in today's report was Q3 deliveries. Tesla had predicted deliveries of 7,800 in the quarter, but reached only 7,785.
Missing by 15 vehicles isn't the end of the world for the company, but with a stock as volatile as TSLA, any miss is noteworthy.
Importantly, Tesla officials downgraded their yearly goal to 33,000 vehicles from 35,000. It'll be an uphill battle for the company in Q4, as they'll have to deliver more than 11,000 vehicles to meet that goal.
Despite missing estimates, Q3's 7,785 deliveries was a new record.
Tesla Earnings Miss No. 2: Unfortunately, Tesla did not mention an exact production total for the quarter, only that it is "entering Q4 with a deficit in production of 2,000 units from Q3."
Previously, the company had expected production between 9,000 and 11,000 for the quarter.
It's worth mentioning that Tesla halted production for two weeks this quarter, as it upgraded its main production facility.
Company officials maintained their yearly goal of 35,000 produced for 2014 and said that 2015 production estimates remain unaffected.
Tesla Earnings Miss No. 3: Today's gross margin was the company's third disappointment. Tesla had previously predicted a gross margin near 27%, but instead reported 23%.
The company said that its margin would have beaten the 27% it reported last quarter if not for one-time items. Still, a miss of 4% is notable for the company that maintained 27% was reachable.
Looking forward, Tesla set a goal of 28% for 2015.
Despite missing on these three key figures, the strong EPS and revenue figures are lifting the TSLA stock price today. The short-term performance of the stock is nearly impossible to predict. Missing on these three huge figures could have easily sent the shares down.
But for long-term TSLA investors, there was one big update in today's report that many Wall Street experts are overlooking. Here it is...
Tesla Gigafactory Update Looms Large
Tesla shareholders have been waiting for an update on the Tesla Gigafactory, and they received one in today's report.
Officials said the foundation of the factory is already under construction. They also have made good progress toward the first cell production by 2016. Now, the plan is to accelerate the pace of construction through the rest of 2014.
That's a promising sign for investors who have been waiting for construction to commence.
Initially, Tesla announced that the plant would be operational by 2017. The goal is to reach maximum output capacity by 2020. At that point, the Gigafactory will supply power for more than 500,000 vehicles annually.
Today's update on the Tesla Gigafactory stretches far past the short-term performance of TSLA stock. In fact, it's one of the biggest long-term catalysts for shareholders.
"The announced plans for what Tesla is calling a Gigafactory mean that the company is pouring resources into slashing battery costs like never before," Money Morning's Chief Investment Strategist Keith Fitz-Gerald said. "This 10 million square-foot factory will have a price tag of $5 billion... hefty, you might say, for a company whose earnings were less than half that in 2013.
"But the juice is worth the squeeze," said Fitz-Gerald. "That's because the Gigafactory will be a pioneer in mass production of cost-effective and high-quality battery packs that will give Tesla an even deeper competitive edge over its competitors going forward. It's going to be the largest lithium-ion battery manufacturing plant in the world."
Editor's Note: The only drawback for TSLA stock long term is its $230 price tag. But Fitz-Gerald has found a way for investors to profit from Tesla's massive potential, at a fraction of that cost. Here's how...