Tesla’s Earnings Report: A Critical Moment for the EV Giant

Tesla is set to report its third-quarter earnings after the market closes today, a pivotal moment for the electric vehicle manufacturer as it navigates a challenging year. Investors are keenly awaiting insights into the company’s financial health and future plans, especially following recent disappointments regarding its robotaxi initiative.

Key Takeaways

• Tesla’s stock has dropped 14% in 2024, making it the worst performer among the "Magnificent Seven" tech stocks.
• Analysts expect adjusted earnings per share of 59 cents, down from 66 cents a year ago, with revenue projected at $25.5 billion.
• The company reported 462,890 deliveries for Q3, slightly exceeding estimates but still raising concerns among investors.

Financial Performance Overview

Tesla’s financial performance has been under scrutiny as it prepares to release its earnings report. Analysts predict a decline in adjusted earnings per share, reflecting the company’s struggles in a competitive market. The following are key financial metrics to watch:

Market Sentiment and Stock Performance

Tesla’s stock has been volatile, particularly after the recent robotaxi event, which failed to meet investor expectations. The stock has traded lower after six of its last eight earnings reports, with an average price swing of plus or minus 10% in the days following the announcements. This trend has left many investors cautious.

• Current Stock Performance: Tesla’s shares are down approximately 12% year-to-date and about 47% from their all-time high in November 2021.
• Short Interest: Interestingly, short interest in Tesla has decreased, suggesting that bearish sentiment may be waning. This could indicate a potential for a rebound if the earnings report surprises positively.

Future Outlook and Investor Expectations

As Tesla approaches its earnings report, investors are eager for clarity on several key issues:

1. Autonomous Vehicle Plans: Analysts are particularly interested in updates regarding Tesla’s autonomous vehicle strategy, including the anticipated rollout of the Model Y and Model 3 in California and Texas.
2. Gross Margins: Automotive gross margins are expected to be a focal point, with estimates around 15.1%. Any deviation from this could significantly impact stock performance.
3. Model 2: Investors are also looking for updates on the under-$30,000 EV, often referred to as the "Model 2," which could play a crucial role in expanding Tesla’s market share.

Conclusion

Tesla’s upcoming earnings report is more than just a financial update; it represents a critical juncture for the company as it seeks to regain investor confidence and navigate a challenging market landscape. With a focus on operational performance and future growth strategies, the results will likely set the tone for Tesla’s stock performance in the coming months. Investors will be watching closely to see if the company can turn its fortunes around and re-establish itself as a leader in the electric vehicle market.

Sources

• Tesla earnings: Q3 results are on deck, putting financials back in focus – MarketWatch, MarketWatch.
• Tesla earnings are the ‘next big thing’ for the EV maker as it tries to be magnificent again – MarketWatch, MarketWatch.