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Tesla Earnings Top, But Deliveries Fail To Meet 'Whisper'

Tesla Motors (TSLA) shares skidded late Tuesday after the electric-car pioneer narrowly beat third-quarter earnings forecasts and missed whisper numbers for deliveries.

"We've been warning about the whisper number," Robert Baird & Co. analyst Ben Kallo told IBD. He'd heard above 6,000 — even over 7,000 — though he deems the roughly 5,500 cars that Tesla delivered to be a "great" showing.

The backdrop for Tesla's Q3 report looked far from ideal. Recent Model S fires weighed on Tesla's stock, and auto industry sales growth slowed a little in October. Gas prices also have been falling, but with a $71,070 entry price, the Model S sedan's buyers are not so sensitive to fuel costs.

Tesla reported its third-ever quarterly profit, 12 cents a share excluding items, vs. the 11 cents modeled by analysts. That was up from a 92-cent loss a year earlier.

Revenue was $602.6 million vs. views for $534.6 million. That was up from $50.1 million a year earlier, before significant Model S production began.

Tesla predicted Q4 profitability "about consistent with Q3." It's unclear what that means, but analysts see a sequential EPS rise to 20 cents. That, and no blowout Q3 results, sent shares falling 13% late.

But CEO Elon Musk said demand remains strong.

"We've had to constrain deliveries to North America in order to get people their cars (in Europe) — they've been waiting in some cases two to three years," he said on a conference call. "I think we could sustain 20,000 cars a year in North America and maybe more than that but it doesn't make sense for us to try to amplify demand if we're not able to deliver.

Tesla shipped over 1,000 cars to European buyers and is now taking reservations in China, where it will begin deliveries in Q1.

"The U.S. may actually be Tesla's toughest market given the combination of low energy prices, relatively modest tax incentives, and the longest driving distances," wrote Jefferies analyst Elaine Kwei in a note Oct. 7.

She forecast then that Tesla could deliver 21,350 vehicles this year and 31,200 in 2014. On Tuesday Tesla said it planned to ship just under 6,000 Model S vehicles in Q4, for a full-year total of 21,500.

Some people "were expecting 23,000 to 25,000 but you have to remember they are building a performance vehicle almost from scratch," Kallo said.

As word of two Model S fires hit the Internet, Tesla stock fell 17% in October, though it rebounded 11% through Tuesday's close, putting it up 422% so far this year.

Analysts and Tesla downplayed the significance of the fires.

Edmunds.com analyst Jessica Caldwell recently found the electric Model S to be the best-selling new car this year in eight of the 25 wealthiest U.S. ZIP codes.

But, she told IBD, "What a lot of people are banking on is that they will be more of a mass-market car company than a niche," but said that remains to be seen.

The Model X crossover SUV should start shipping next year, followed by a lower-price vehicle.