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Tesla Earnings Preview: Are Low Expectations Setting Up an Upside Surprise?
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Tesla (TSLA - Free Report) , one of the world’s leading electric car companies is set to report earnings Wednesday, October 18, after the market closes.
Earnings estimates for Tesla have been falling since late last year and current quarter EPS estimates are forecast to show a -30.5% fall YoY. Declining profits have been primarily due to cutting prices, as well as scheduled pauses in manufacturing, but these expectations seem particularly low.
Sales for the quarter are still expected to climb 13.6% YoY to $24.4 billion, and the Cybertruck is slated to launch before year end. That’s ammo for the bulls. It is also worth noting that Tesla has missed earnings estimates only once in the last three and a half years.
Image Source: Zacks Investment Research
Analysts are Bearish
Analysts have nearly unanimously downgraded earnings estimates across timeframes, demonstrating the marked fall in expectations for the EV manufacturer. The big data to watch at the meeting is margins, which should see a fall considering the developments in vehicle prices.
Image Source: Zacks Investment Research
Gross margins have expanded to impressive levels over the last few years, now well above the incumbent auto manufacturers. However, we can see they have been falling since Q1 2022, sparking reasonable concerns.
Analyst’s consensus estimates are for gross margins of 18.2% in the current quarter, which would show another decline. But, if Tesla can show a decline less than expected, it could trigger considerable buying.
Image Source: Zacks Investment Research
Technical Setup
Tesla stock traders have clearly been anticipating this earnings report, as the stock has consolidated since its last earnings. I would expect price to break one way or the other depending on the outcome. It is encouraging to see price bounce off the lower bound during Monday’s trading session.
Image Source: TradingView
Bottom Line
There is a long list of investors that have been burned trying to bet against Tesla over the years, none of which have been successful. Considering the strong bearish tilt going into the earnings report, I would not be surprised to see Tesla register an upside surprise on Wednesday evening.
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Tesla Earnings Preview: Are Low Expectations Setting Up an Upside Surprise?
Tesla (TSLA - Free Report) , one of the world’s leading electric car companies is set to report earnings Wednesday, October 18, after the market closes.
Earnings estimates for Tesla have been falling since late last year and current quarter EPS estimates are forecast to show a -30.5% fall YoY. Declining profits have been primarily due to cutting prices, as well as scheduled pauses in manufacturing, but these expectations seem particularly low.
Sales for the quarter are still expected to climb 13.6% YoY to $24.4 billion, and the Cybertruck is slated to launch before year end. That’s ammo for the bulls. It is also worth noting that Tesla has missed earnings estimates only once in the last three and a half years.
Image Source: Zacks Investment Research
Analysts are Bearish
Analysts have nearly unanimously downgraded earnings estimates across timeframes, demonstrating the marked fall in expectations for the EV manufacturer. The big data to watch at the meeting is margins, which should see a fall considering the developments in vehicle prices.
Image Source: Zacks Investment Research
Gross margins have expanded to impressive levels over the last few years, now well above the incumbent auto manufacturers. However, we can see they have been falling since Q1 2022, sparking reasonable concerns.
Analyst’s consensus estimates are for gross margins of 18.2% in the current quarter, which would show another decline. But, if Tesla can show a decline less than expected, it could trigger considerable buying.
Image Source: Zacks Investment Research
Technical Setup
Tesla stock traders have clearly been anticipating this earnings report, as the stock has consolidated since its last earnings. I would expect price to break one way or the other depending on the outcome. It is encouraging to see price bounce off the lower bound during Monday’s trading session.
Image Source: TradingView
Bottom Line
There is a long list of investors that have been burned trying to bet against Tesla over the years, none of which have been successful. Considering the strong bearish tilt going into the earnings report, I would not be surprised to see Tesla register an upside surprise on Wednesday evening.