Shares of Tesla Motors shot up Monday after the automaker surpassed its own sales expectations of its Model S luxury sedan, and Wall Street analysts expected even more good news Tuesday.
Tesla's CEO, Elon Musk, made good on his February pronouncement that Tesla would be profitable in the current quarter for the first time in the company's 10-year history.
Since then, Musk has been tweeting out cryptic hints of another big announcement Tuesday and -- following Tesla's positive stock performance -- wrote on Monday that "the Tues news is arguably more important."
Analysts who follow Tesla said investors would be pleased if Musk announces that he is personally taking an even greater stake in the company by possibly bankrolling a leasing program, which is currently unavailable in North America and could conceivably further drive consumer demand; is using his own money to help pay back loans; or is funding a supercharger network venture to address the limited range on electric-vehicle batteries.
"Anytime a CEO is willing to put more skin in the game, investors like to see that," said Ben Kallo, a senior research analyst at Robert W. Baird.
On Sunday, Tesla announced that it sold more than 4,750 Model S sedans this quarter, surpassing its own expectations of 4,500 units.
After Tesla amended its first quarter guidance to "full profitability" late on Sunday, shares rose as high as $46.68 in Monday's morning trading on the Nasdaq, the highest price for Tesla stock ever and 23.2 percent higher than the previous closing price.
Shares of Tesla later closed Monday at $43.93, or up 15.9 percent, still an all-time high.
The Model S had been available with three battery pack options that offer roughly 160, 230 or 300 miles per charge. But Tesla announced Sunday that it is scrapping production of the 160-mile version due to lack of demand. Only 4 percent of customers who placed reservations chose that option, and Tesla said it could no longer justify continuing production of its small battery pack.
"They set sales expectations to the point where they gave themselves some room," Baird said. "But there were a lot of question marks whether they could reach profitability. There are going to be hiccups in any new company creating new technologies. So far they've been able to manage them as small hiccups, with nothing really big."
Andrea James, vice president and senior research analyst with Dougherty & Co., said Wall Street investors have been waiting for this moment for Tesla.
"You've got new investors who want exposure to Tesla once it becomes profitable, and now that's happening," James said. "I expected them to do well, but they are doing even better than expected, so that's good."
But Tesla continues to struggle with issues of battery range and consumer demand for its vehicles.
So James is among Tesla analysts who would welcome an announcement by Musk on Tuesday that addresses either issue -- through a supercharger network or a new leasing program.
"Those are the two issues facing the company right now," James said.
Jack Nerad, executive market analyst for Kelley Blue Book, has much higher expectations.
He's hoping Musk announces "a battery breakthrough that changes the whole ballgame," such as cheaper batteries or ones that can be recharged much faster.
Otherwise, Nerad was cautious following Tesla's financial and sales performance.
"The Street is responding very positively to tepid or so-so news," Nerad said. "You make your numbers and sometimes the Street goes crazy over it. Sometimes you make your numbers and the Street responds, 'That wasn't enough.' "
So Nerad is more interested in seeing Tesla's sales numbers rise much higher -- and eventually maintain much higher volume.
"The true test is what a model does in its second year in the marketplace, what it does in the third year in the marketplace and what it does in the fourth year in the marketplace, not what it does in the first year," Nerad said. "Nobody has really quite cracked the nut of a high-volume pure electric vehicle. That's what the model S was supposed to do, or at least come close. Instead, it's evolved into a much higher-priced, lower-volume sedan status."
(Jeremy C. Owens of the San Jose Mercury News contributed to this report.)
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