Tesla earnings: It's put up or shut up time for Elon Musk

Tesla CEO Elon Musk. Photo / AP

Shares of Tesla Inc. soared today, a day ahead of the company's third-quarter earnings release, after an investment firm that had long bet against the company's stock reversed its position and said it would invest in the electric car and solar panel maker for the long run.

Tesla's stock jumped 12.7 per cent to $294.14 after Citron Research wrote on its website that Tesla is destroying the competition.

The price spike comes a day before Tesla's earnings announcement scheduled to be issued after the close of trading on Wall Street Wednesday.

CEO Elon Musk has said he expects the company to post a net profit from the third quarter into the future as Tesla delivers more Model S small electric cars designed for the mass market.

He told employees at the end of September that the company was close to making money and proving naysayers wrong.

What's next

It's put up or shut up time for Musk with the earnings release, the timing of which was announced Monday night with less than two days of notice.

He expects a net profit under national accounting standards, but Wall Street doesn't believe him.

Of 15 analysts polled by data provider FactSet, none expects the company to make the net profit.

As a group, they expect a loss of US$173.8 million ($265.3m), or 95 cents per share.

"We'd be really very surprised if they posted a profit for the third quarter," said Garrett Nelson, an analyst for CFRA Research.

"This is a company that lost over US$3 per share each of the last two quarters. To go from that to all-of-the-sudden profitable would take a dramatic improvement."

The backdrop

Tesla has had only two profitable quarters since becoming a public company eight years ago, and has never made money for a full year. In the second quarter it lost US$717m.

But production and deliveries were up from July through September.

Musk behaved erratically during the quarter, smoking what appeared to be marijuana on a video podcast and declaring on Twitter that he had funding secured to take the company private at US$420 per share. That brought a lawsuit from the Securities and Exchange Commission alleging securities fraud and seeking to oust Musk as CEO.

In a settlement, Musk agreed to step down as chairman for three years. Musk and Tesla will each pay US$20m to resolve the case, and he also must have someone monitor his company-related tweets.

- AP