Tesla investors will be closely watching profit margins when the company reports earnings on Wednesday.
Tesla stock is down 13% this year compared to the S&P 500’s 22% gain.
Some analysts expect Tesla’s third-quarter earnings to signal a turning point, while others see more pain ahead.
Tesla will report third-quarter earnings results after the market close on Wednesday, and Wall Street will be hyper-focused on the company’s core auto business.
That’s a shift from the recent hype surrounding Tesla’s robotaxi, which is still years away from hitting the market.
At the end of the day, Tesla gets the bulk of its revenue and profits from selling cars, and Wall Street wants to see the company return to growth mode in its core auto business.
The company is on track to deliver about the same number of cars this year as it did in 2023, and it has seen a steady deterioration in its profit margins due to aggressive price cuts earlier this year.
Tesla stock is down 13% year-to-date, compared to a 22% gain for the S&P 500 over the same time period.
However, some analysts on Wall Street expect the upcoming third-quarter earnings print will be a sign that the worst is behind Tesla.
Here’s what Wall Street expects from Tesla’s upcoming earnings report.
“With Tesla’s Robotaxi Day passed, we believe the focus for Tesla at least for now shifts back to fundamentals,” Barclays analyst Dan Levy said in a note last week.
Levy expects Tesla to beat earnings estimates, with estimated earnings per share of 68 cents versus consensus of about 60 cents.
“After a run of sharply negative revisions to earnings estimates, Tesla estimates have largely stabilized. Volumes are expected to be flat y/y, margins have troughed and are set to improve, reg credit revenue can be a solid boost as other OEMs rely on Tesla to achieve compliance, Tesla Energy is generating solid growth, and opex may trend lower for now as Tesla realizes the cost saves of headcount reductions,” Levy said.
Those points, along with the fact that Tesla stock sold off after its robotaxi event, give Levy confidence that the company’s third-quarter earnings will be a positive catalyst for the stock.
Aside from Tesla discussing the earnings results and guidance on its conference call, Levy said any commentary about plans for a lower cost vehicle could move the stock.
“We also wouldn’t dismiss the notion that Tesla could forgo a ‘Model 2.5,’ instead focusing its resources on rolling out the [autonomous vehicle] strategy — such a move would likely be treated quite negatively by the stock,” Levy said.
