Tesla earnings Q2 2018

Patrick T. Fallon | Bloomberg | Getty Images

Elon Musk, co-founder and chief executive officer of Tesla Inc.

Tesla is scheduled to report second-quarter results after the market close Wednesday in what may be one of the most highly anticipated earnings reports this season.

Here’s what Wall Street expects, based on average estimates of analysts polled by Thomson Reuters:

• Adjusted earnings: a loss of $2.92 per share.
• Revenue: $3.92 billion.

This quarterly update will be a crucial one for Tesla. Investors have growing concerns about the sustainability of Tesla’s profits, the reported quality problems with its cars, and overall demand for the Model 3, which is the company’s biggest bet by far.

The electric car maker reached a milestone last month, announcing that it is making roughly 5,000 Model 3 sedans every week — halfway to its goal of 10,000. Production, though, is many months behind schedule and the company has resorted to setting up assembly lines in temporary tent structures.

There are also concerns about quality issues with the cars. Current and former employees have complained that Tesla is producing a high ratio of flawed parts and vehicles as it rushes to ramp up output.

Investors will also be watching to see how much cash Tesla is going through. It’s been burning cash at a rate of nearly $1 billion per quarter, and it is expected to need more with recent reports the company is planning to build factories in China and Europe.

Many analysts think the company will have to raise fresh capital by the end of the first quarter of 2019. Tesla seems to have taken another step toward getting its finances in line by recently hiring a new chief accounting officer.

Tesla has also courted controversy in recent months due to the erratic behavior of Chairman and CEO Elon Musk. On a conference call discussing its first-quarter earnings, he called questions posed by analysts “boring, bonehead questions,” and more recently caused a stir with some off-color comments on Twitter. Some investors worry Musk’s online presence risks alienating fans and potential customers, and distracts investors and employees from Tesla’s basic goals.

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