Tesla Likely To Beat Estimates, But Bumpy Ride Ahead

As the market prepares for Tesla Motors, Inc. (TSLA) to release its third quarter earnings for FY13 on November 5, investors will be focusing on key metrics and the company’s guidance to see where the stock is headed. The fourth quarter is crucial as domestic auto sales are typically the highest due to the holiday season.

In the three months since its last quarterly performance was unveiled, Tesla has captivated investors and analysts, with its stock price rising around 30%. Consensus estimates for its earnings and revenues have been revised and re-revised, but the company’s underlying potential and challenges faced by it still remain.

One thing is clear: There is no shortage of demand for the Model S, and recent data suggests that the interest is not just from buyers looking for fuel savings. In a recent report published by Forbes, Tesla’s Model S was the bestselling car this year in the nation’s top two most affluent neighborhoods in California.

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Electrifying Performance By Tesla: All Charged Up

It goes without saying that Tesla Motors (TSLA) is no ordinary company. You can’t really be considered ‘ordinary’ if you’re manufacturing the next generation of human transport vehicles – and even market analysts agree. They’re calling Tesla a technology company, rather than a conventional automaker. We’ll leave that discussion for another day, because right now Tesla has our attention for entirely different reasons.

Tesla stock is up 460% year-to-date, while sales are expected to grow fourfold to around 21,000 units by the end of 2013. Even though the mean market consensus for its stock price is around $155, Deutsche Bank (DB) recently upgraded it to $200. The Germans must be on to something, as Tesla’s stock is already trading at $185, at a 12-month forward price-to-earnings (P/E) multiple of 194x.

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