Will Tesla Q4 earnings surprise Wall Street today? 📊

Today, after the session on Wall Street, we will learn the results of the largest American electric car manufacturer, Tesla (TSLA.US). Investors' attention will be focused not only on the results for the past quarter but also on the company's forecasts for the current year. Tesla has had a difficult start to 2024, with its shares losing over 16% of their value on the stock exchange, and market expectations indicate weak data for the last quarter compared to the previous year.

Expected Results:

• Sales Revenue: 25.87 billion USD compared to 23.35 billion USD in Q3
• Net Profit: 2.60 billion USD compared to 1.85 billion USD in Q3
• Earnings Per Share (EPS): 0.73 USD compared to 0.63 in Q3

Expectations:

Tesla is expected to report a significant drop in fourth-quarter net income compared to the previous year, largely due to reliance on price cuts to boost demand. A more modest growth for Tesla in 2024 is expected, with an estimated 16% increase in deliveries to 2.1 million vehicles, down from a 38% increase in 2023. This growth rate is significantly lower than Tesla's target of 50% annual growth. Additionally, Tesla's automotive gross margin is expected to shrink to 15.7%, aligning more closely with traditional automakers.

Tesla's valuation, heavily influenced by its sales momentum and Elon Musk's vision for AI and robotics, faces pressure amid intensifying competition, particularly from China's BYD. Musk's recent comments suggest a potential shift in focus unless he gains greater control of the company. Tesla has responded to market challenges by slashing prices, particularly in China, and plans to start production of a new mass-market electric car, named "Redwood," in mid-2025. However, the company also faces operational hurdles, such as suspending production in Germany due to parts shortages and the recent overtaking by BYD as the world's top EV seller.

Investment banks’ highlights:

• Bank of America: strong finish for Tesla in 2023, driven by US sales, global EV production increase, and solid pricing. However, potential dampened sentiment on EVs in Q4 could be expected as well as flat or slightly down 2024 year.

• Wells Fargo: forecasts Q4 earnings of 59 cents per share, below the consensus of 72 cents.

• Morgan Stanley: reduces expectations citing a challenging year ahead for EVs and a growing imbalance between supply and demand.

• Deutsche Bank: also sees downside risks to Tesla's 2024 volume and margin outlooks, citing lower volume expectations, pricing pressure, Cybertruck margin impact, and higher tax rates in China.

• UBS: investment bank company is cautious about Tesla's 2024 guidance, expecting units to be guided to 2.1 million. UBS anticipates more price cuts and slower growth in the US and Europe, leading to a 2024 margin of 16.2% versus the Street's consensus 18.5%.

Price chart

Tesla has had a tough few weeks during which its stock price has noticeably dropped. Currently, the stock is trading around the lower limit of the support line. If the results turn out to be much worse than market expectations, we might see an attempt to break this line. Otherwise, maintaining levels between 200-210 USD will be important.

Source: xStation 5