Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low

Earnings day arrives for Tesla Inc. with the EV maker and the stock under a cloud.

The EV maker is scheduled to report fourth-quarter results Jan. 25 after the bell. A call with analysts and others is about for five:30 p.m. Eastern.

announced price cuts within the U.S. and Europe earlier in January in a bid to achieve or retain market share and warmth up demand as startup EV makers in addition to legacy auto makers have broadened their electric-vehicle offerings.

The move also means some Tesla cars will qualify for tax breaks and take a success on margins — and earnings.

“The worth cuts have a huge effect on (Tesla’s) economics,” Toni Sacconaghi at Bernstein said in a recent note, taking the chance to lower his 2023 per-share earnings expectations to $3.80 from $4.96, which was around consensus.

To Sacconaghi, Tesla could have miscalculated.

The arrival of its Cybertruck will help Tesla in 2024, but “the important thing challenge for Tesla is that it needs more, lower cost EV offerings, and we don’t expect a brand new, low price offering to ship in volume until 2025, by which era Tesla will face much more EV competition,” the analyst said.

Tesla has said that the Cybertruck, a futuristic-looking all-electric pickup truck, is on target to start out production in mid-2023. Investors might be on the lookout for any updates on that timeline.

“Tesla’s apparent key miscalculation was its belief that Model 3 and Y could collectively sell (3 million to 4 million) units annually,” enough to sustain growth through 2024 until a model would arrive.

Emmanuel Rosner at Deutsche Bank had a distinct tackle the worth cuts.

As a substitute of an motion that may put pressure on margins and earnings, “we imagine this likely is a daring offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and value superiority,” Rosner said.

Here’s what to anticipate:

Earnings: Analysts polled by FactSet expect Tesla to report adjusted earnings of $1.15 a share within the fourth quarter, which might compare with adjusted earnings of 85 cents a share within the fourth quarter of 2022.

Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts in addition to buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted profit of $1.23 a share for Tesla.

Revenue: The analysts surveyed by FactSet are calling for sales of $24.96 billion for Tesla, which might compare with $17.72 billion within the fourth quarter of 2022. Estimize is expecting nearly the identical in the mean time, $24.97 billion in revenue for the quarter.

Stock price: Tesla stock has been hovering around two-year lows for the past few months, and slipped under $200 in early November. Prior to now 12 months, the stock has lost 63%, compared with losses of around 14% for the S&P 500 index.

What else to expect: There may be a brand new person on the post-results call: Tom Zhu, Tesla’s top executive in China, took the reins of the U.S. factories in addition to sales in North America and Europe, based on reports. Tesla has yet to make his recent role official.

Tesla’s executive team has been relatively stable for the past couple of years, following a spate of exits in 2018 and 2019, including the exit in July 2019 of Chief Technology Officer J.B. Straubel.

Chief Executive Elon Musk said in mid-December he’d step down from Twitter Inc. as soon as he finds “someone silly enough to take the job,” but up to now there are not any indications that a successor is within the wings.

Musk bought the social-media company in October, presiding over months of turmoil and layoffs and likewise selling tens of millions of dollars in Tesla stock to fund the deal.

Key Tesla investors, including one who hopes to change into a Tesla board member, have pleaded with Musk to deal with Tesla and take a look at to stanch the stock’s losses.

Investors may also control Tesla’s 2023 guidance. For many of last 12 months, the EV maker kept an official guidance of fifty% average annual sales growth.

Tesla in early January reported that it delivered 1.31 million cars in 2022, up about 40% from 2021. Wall Street expects deliveries, a proxy for sales, of $1.9 million vehicles in 2023.

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