Comparing Tesla's Earnings Q1 2023 and Earnings Q3 2023
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1) Production and delivery were down compared to previous quarter and below market expectation. In Q1 2023, the reason for the drop was more worse because it was due to China Shanghai Gigafactory shutdown due to COVID-19. China economy was still in a state of lock down which affected demand of almost everything including EV. In Q3 2023, Tesla production was slowed down by factory upgrade in almost all factories. Demand was hit due to China economy slowdown and increase in competition.
2) Market expectation for earnings such as earnings per share or eps was downgraded prior announcement. This was expected because of the fall in Q1 production and delivery.
3) Market sentiment was against Tesla share price. Analysts started to downgrade rating to hold or sell and target price adjusted down. Tesla bears were quick to report that the EV company is losing market share and p/e ratio is high as compared to the rivals.
Post Q1 2023 Earnings
The above sound familiar when compared to Q3 2023 before earnings announcement. What followed after Q1 2023 earning report was share price fell to a low of $152 in mid-April and rebound to a high of $276 in early Jun. The share price experienced winning streak between end-May to early-June amid artificial intelligence rally and GM announced using Tesla Supercharger and adoption of Tesla NACS charging standard.
Short-sellers sustained around $120 billion in mark-to-market losses in 2023, of which $72 billion occurred in the first half of June, according to a Wall Street Journal report on June 20, citing data from financial data firm S3 Partners.
Bottom-line
For the coming Q3 2023 earnings, aome traders are predicting using chart and indicator that Tesla stock price is bearish and market analysts may further downgrade rating and target price after announcement.
It is important to look beyond to Q4 production and delivery which some technical indicators are showing Tesla stock price is "stalling bullish" and "buy rating" for long term. Tesla also announced that the company will meet the 1.8 million target by end 2023. There are few reasons the stock may rally in Q4 - Cybertruck production and delivery, Tesla price cutting based on cost reduction (not profit cutting), Tesla New Models qualified for $7,500 full tax credit, value added brought by Dojo supercomputer and neutral network self-learning on FSD (generic artificial intelligence) and surge in revenue for the Energy Storage business.
Based on current data, Tesla Q1 to Q3 sales has met the whole year 2022 sales. Tesla has high p/e ratio as compared to rivals since year 2021 and may continue to do so. It makes sense for a company to re-invest its profit (invest heavily in new Gigafactory, Storage business R&D etc) with growth potential to hold relatively high p/e ratio for long term.
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