With Q2 earnings falling far wanting expectations, there could also be more losses to come back
Tesla (NASDAQ:TSLA) stock slumped 10% Wednesday as investors reacted to disappointing Q2 revenue and delivery figures for the automaker.
The eagerly anticipated earnings report, published Wednesday morning, showed a net income deficit of 45% 12 months over 12 months, while EV deliveries were down nearly 5%.
CEO Elon Musk also warned that the firm’s promised shift to cheaper models was proving harder than anticipated.
There have been still some positive signs for the electrical vehicle (EV) giant, with revenue up 2.4% to $25.5bn, beating Wall Street’s call for $24.5 billion. That isn’t a large beat, though, and it wasn’t enough to assuage eager stock traders.
Tesla stock is pricey vs. the corporate’s earnings
The underside line is that Wall Street only expected Tesla earnings to represent $0.61 per share in 2024’s second quarter. That’s not much to ask for when the stock price is over $200.
Nonetheless, Tesla couldn’t even manage that, having earned only $0.56 per share in Q2. Ultimately, investors may find it difficult to forgive this “Magnificent Seven” stock member for reporting two consecutive quarters of declining profits.
Furthermore, Tesla earnings have now missed Wall Street’s consensus EPS estimates for 4 consecutive quarters. By our calculations, Tesla’s EPS for the past 4 quarters is $0.66 + $0.71 + $0.45 + $0.52, or $2.34 per share.
Assuming a share price of $230, this means a trailing 12-month price-to-earnings (P/E) ratio of $230 / $2.34, or around 98x. That’s after TSLA stock’s post-earnings tumble, so don’t be too surprised if the shares proceed to lose value within the near term.
In light of Tesla’s quarterly results and the resultant share-price drop, it is smart that some analysts are openly expressing their disappointment. For instance, Citigroup analyst Itay Michaeli complained that “underlying second-quarter results were somewhat worse than expected”.
Meanwhile, Wells Fargo analyst Colin Langan warned that the firm’s second quarter “had no razzle-dazzle, leaving investors focused on the weakening fundamentals”. Tesla’s shareholders might wonder, then, whether or not they must have approved Musk’s massive $56 billion pay package not way back.
Robotaxi delay adds to frustration
In case disappointing quarterly data weren’t problematic enough, investors were undoubtedly also frustrated to listen to Musk’s announcement that Tesla’s much-touted robotaxi reveal shall be delayed from Aug. 8 to Oct. 10. This raises an issue that the Tesla stock bulls won’t need to ask: Is there “trouble under the hood” that Musk’s not telling investors about?
Musk tried to reassure investors, saying the reveal is being pushed back so as to add “a pair other things” to Tesla’s robotaxis. Now, the anticipation will proceed to construct and Tesla’s robotaxi unveiling can have to impress. Otherwise, investors could also be sorely dissatisfied.
But CFRA analyst Garrett Nelson doesn’t see Tesla’s robotaxi delay nearly as good news for the automaker.
“While Tesla shares have rebounded strongly in recent months, with the Robotaxi Day having been delayed until October, we see little in the way in which of near-term catalysts for the story,” he said.
Nelson reduced his Tesla stock price goal from $250 to $240, however the share price was already substantially below that on Tuesday. If more analysts slash their price targets – and Tesla doesn’t amaze Wall Street with its eventual robotaxi reveal – there’s likely more share-price carnage in store.