Tesla Inc. is scheduled to report first-quarter earnings after the bell next Wednesday, with investors focusing on the impact of another volley of price cuts on margins and any color around demand for the company’s EVs.
“We are not optimistic about Tesla earnings next week,” said Matt Tuttle with Tuttle Capital Management, citing the price cuts and recent stock declines that left Tesla shares trading at their lowest in about a month.
“I wouldn’t be surprised to see the stock make a run to $150,” Tuttle said.
Tesla is on a “warpath” and “maintaining its aggressive approach to pricing,” Alex Potter at Piper Sandler said. “We think investors should expect relentless price cuts to continue.”
Recent moves suggest that whenever wait times for Tesla’s EVs sink to four to six weeks, the EV maker moves to adjust prices, the analyst said.
The cuts are “obviously a headwind for margins” but are not as problematic for Tesla, given industrywide affordability concerns and Tesla’s superior cost structure, Potter said.
Here’s what else to expect:
Earnings: Analysts polled by FactSet expect Tesla to report adjusted earnings of 86 cents a share in the first quarter, which would compare with adjusted earnings of $1.07 a share in the first quarter of 2022.
Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting earnings of 99 cents a share.
Revenue: The analysts surveyed by FactSet are calling for sales of $23.8 billion for Tesla, compared with $18.8 billion in the first quarter of 2022. Estimize is expecting $24.5 billion in revenue for the quarter.
Stock price: Tesla shares have lost about 45% in the past year, compared with losses of around 7% for the S&P 500 SPX. Recent months have been kinder on the stock, however: Tesla is up 47% so far this year, compared with gains of around 7% for the broader index.
What else to expect: The U.S. Environmental Protection Agency on Wednesday unveiled a set of rules designed to boost EV adoption and ensure that all-electric options make up as many as two out of every three new passenger vehicles sold in the U.S. by 2032.
Tesla will benefit the most from stricter requirements on internal-combustion engine vehicles due to its scale and U.S. manufacturing capabilities, Ben Kallo at Baird wrote in a recent note.
Moreover, despite the recent cuts, Tesla “will be able to maintain industry leading operating margins and is in the best position among auto peers to weather economic headwinds,” Kallo said.
After the report on Wednesday, Tesla is scheduled to host a question-and-answer webcast at 5:30 p.m. Eastern time to discuss the company’s earnings and outlook.