Tesla (TSLA) is set to report its third-quarter earnings and revenue, and analysts are approaching this with tempered expectations after the company’s underwhelming Q3 deliveries were announced earlier in October. Wall Street anticipates Tesla’s earnings per share (EPS) to decrease by 30% to 73 cents, marking the lowest figure in two years for CEO Elon Musk. However, revenue is expected to increase by 13% to $24.32 billion. Concerns are rising over Tesla’s profit margins remaining below the company’s self-described “floor,” with fears of more surprise price cuts in the final months of 2023.
Despite these concerns, Tesla enthusiasts are already banking on a fourth-quarter recovery in deliveries, thanks to the revamped Model 3 in China and the upcoming launch of the Cybertruck. Analysts’ focus seems to be shifting away from Q3 and toward 2024 volumes and Cybertruck execution.
Morgan Stanley analyst Adam Jonas noted that “expectations seem quite low for the quarter” and emphasized the significance of focusing on the Cybertruck and 2024. Meanwhile, Wedbush analyst Dan Ives mentioned that Wall Street will be “laser-focused on margin performance and the overall outlook for 4Q.” Ives also expects significant attention during the Q3 conference call to be on the new Model 3 and updates on Cybertruck production.
While the macroeconomic situation may not be ideal, Ives believes that Tesla’s demand story has stabilized at current price levels and predicts a strong Q4 ahead. Despite this, Piper Sandler analyst Alexander Potter lowered Tesla’s price target from 300 to 290 while maintaining an overweight rating on the shares, suggesting that Tesla might experience sideways trading in the coming months.
In summary, Tesla’s Q3 performance and future outlook, particularly regarding the Cybertruck, are key points of interest, with the company facing the challenge of low expectations and concerns about pricing strategies and profit margins. Tesla’s stock has experienced fluctuations, with analysts providing varying price targets and estimates. The Q3 conference call is expected to shed light on Tesla’s strategy and outlook for the future, specifically its pricing, margins, and demand.
Tesla’s stock is currently below a buy point in a cup-with-handle base, and UBS recently reduced its 12-month target for the stock. Jefferies also lowered its price target on Tesla. Additionally, Wells Fargo anticipates falling gross profit margins for Q3 and further weakness in Q4. The ongoing United Auto Workers strike against other automakers may work in Tesla’s favor, given its non-union status.
The Q3 conference call is expected to be a critical opportunity for Tesla to communicate its pricing, margin strategy, and demand outlook into the fourth quarter.
Tesla stock holds the fourth position in the 35-stock IBD Automaker industry group, with a strong Composite Rating of 98, a Relative Strength Rating of 95, and an EPS Rating of 93.
In conclusion, while Q3 expectations are relatively low, Tesla’s future performance, margin strategies, and pricing will be closely examined in the coming days and may play a crucial role in determining the stock’s trajectory.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Echo Gazette journalist was involved in the writing and production of this article.
