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TSLA: Upcoming Earnings Call Could Be Tesla's Biggest To Date

|About: Tesla, Inc. (TSLA)


Europe and Asia expansion expected to double US sales.

Company expected to blow out earnings by many Wall Street analysts and options traders.

Stock could easily trade above $300 after the earnings announcement.

Tesla Motors Inc. (NASDAQ:TSLA) will announce its fiscal first quarter earnings and host a conference call on May 7, 2014. While shares have struggled to hold gains over the last 2 months, since handily beating analyst estimates last quarter, the upcoming earnings call is expected to show blow out earnings by many analysts and traders. As recently as this past week, CNBC analysts have been showing strong support for a blow out earnings call next week. It wasn't that long ago that the Streets' Jim Cramer was warning investors of playing with fire investing in shares of Tesla. So, why the sudden CNBC change of heart?

In March 2014, the company cited an expected surge in sales by 55% this year, and plans to invest $5 Billion in building a gigafactory in the U.S.

The automaker, led by Elon Musk, has forecast a more than 55 percent jump in global sales this year and announced plans to spend as much as $5 billion to build a so-called gigafactory in the U.S.

I expect there will be some major information provided in the upcoming earnings call regarding the gigafactory that will add additional value to the stock as investors continue to cheer expansion and growth of the Tesla Model.

However, Morgan Stanley has not been as encouraged by the future prospects of growth at Tesla, and recently published a report citing concerns of a North American "zero" growth possibility.

Tesla Motors Inc Looks Solid Despite Negative Morgan Stanley Report

Current analyst estimates for the upcoming earnings call range from a loss of 7 cents up to as high as earning 40 cents earnings per share. The average estimate is for the company to earn 10 cents per share. The range seems excessive, but likely takes into account the unknown surge, or lack thereof, for global sales growth and something investors should be keeping a close eye out for in the earnings report. Future deliveries, and any information to negate Morgan Stanley's dismal May delivery prediction, will also be an important key data set for investors to monitor in the upcoming conference call. As the economy recovers, it will be interesting to see how well the company's vehicle sales are responding.

The charts shows why the upcoming earnings call and a huge earnings beat is so important for TSLA going forward. A huge earnings estimate beat could solidify the company's growth story and global expansion success.

Quarterly Earnings & Estimates - TESLA MOTORS INC (TSLA)

Actuals vs. Estimates for TESLA MOTORS INC TSLA

Trading in TSLA shares will surely be erratic in the upcoming week, with large bets already being placed on a blowout quarter for the company. The upcoming earnings call will likely be the biggest in TSLA's history to date, as the company will have to show sustained growth capability and provide information on the gigafactory plan to show investors the company is going to be the top EV player.

Personally, I expect TSLA to report a blow out quarter, and the shares will respond if they do just that. I also expect some major updates on global expansion and the gigafactory. Shares could easily trade above $300 in a very short period should the earnings report and conference call be as positive as many expect. On the other hand, if the company misses or reports mid-line numbers and does not provide a rosy forecast going forward, expect the shares to take at least a 25% haircut. I am planning to play TSLA long next week buying NTM and OTM call options for a possible spike in the share price after the earnings release.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.