Tesla Inc. (TSLA) is on the verge of addressing key concerns regarding demand and margins that have impacted its stock performance recently. The much-awaited third-quarter earnings report is scheduled to be released after market close on Wednesday. Following the report, the electric-vehicle manufacturer is set to provide an update to analysts in a webcast conference call.
Key Highlights to Watch Out For
Analysts surveyed by FactSet are predicting Tesla to announce adjusted earnings of 73 cents per share for the third quarter, compared to the $1.05 per share reported in the same period last year.
According to the same FactSet survey, analysts expect Tesla’s revenue for the third quarter to reach $24.2 billion, surpassing the $21.5 billion generated in the corresponding quarter of the previous year.
Though Tesla’s shares have gained over 100% year-to-date, outperforming the S&P 500’s 14% growth, recent months have witnessed a decline of more than 11% for Tesla’s stock, contrasting with the S&P index’s losses of about 3%.
Investors have been growing increasingly apprehensive about Tesla’s profit margins due to recent price cuts. Wall Street will be closely examining the margin performance during the earnings announcement, along with the company’s outlook for the fourth quarter, as mentioned by Wedbush analyst Dan Ives in a note on Tuesday.
As Tesla anticipates releasing its third-quarter earnings report, the company finds itself at a crucial juncture where it must address lingering doubts surrounding demand and margins. The outcome of this report will have a significant impact on Tesla’s future trajectory in the stock market.
Tesla’s Quarterly Sales Numbers Fall Short
Tesla recently announced its quarterly sales figures, which fell below expectations. Due to unforeseen interruptions in their factories in Shanghai and Austin, Texas, it is estimated that approximately 20,000 vehicle deliveries will be delayed until the end of the year.
Analysts Express Disappointment with Missed Estimates
Renowned analyst Ives stated that even without any overly optimistic assumptions, Tesla undeniably fell short of street estimates this quarter, leaving bullish investors disappointed. However, he remains optimistic about the future performance of the company, particularly in the fourth quarter of this year and beyond.
Price Cuts and the Model 3
Ives also highlighted two significant areas of interest: the recent refresh of the Model 3 and the overall demand outlook for Tesla. It seems that the majority of price cuts have already taken place, and the focus now shifts to understanding how these factors will impact future sales.
Anticipation Surrounding the Cybertruck
The much-anticipated Cybertruck, Tesla’s electric pickup truck set to launch by the end of this year, continues to capture attention in the market. BofA Securities analyst John Murphy emphasized the significance of this product in a recent note.
Preparing for Disappointing Results
Barclays analyst Dan Levy acknowledged that the buyside investors are bracing themselves for a less-than-stellar outcome. Levy estimates the gross margins for this quarter to be at 17.1%, marking Tesla’s lowest gross-margin quarter since Q1 2019. This decline is primarily attributed to price pressures and lower-than-expected volumes, which outweigh any positive contributions from a favorable product mix and cost benefits from raw materials.
In summary, while Tesla’s quarterly sales numbers have fallen short, analysts remain cautiously optimistic about the company’s future prospects.