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Tesla Q2 EPS Preview: Can Earnings Electrify the Stock?
Key Takeaways
Analysts expect Tesla to report Q2 EPS of $0.50.
The options market is implying a 6% post-EPS move.
Energy and future tech timelines will be important clues for investors to observe.
Tesla Q2 Earnings
Zacks Rank #3 (Hold) stock Tesla ((TSLA - Free Report) ) will report earnings on second quarter earnings results on Wednesday, July 22, after the equity market close. Zacks Consensus Analyst Estimates predict that Tesla will earn $0.50 for Q2, up from the $0.41 the company earning in Q1.
Image Source: Zacks Investment Research
Tesla’s Recent EPS History
Tesla’s recent earnings track record has been spotty to say the least. The EV maker has missed Zacks Consensus Estimates in 6 of the past 10 quarters.
Image Source: Zacks Investment Research
Nevertheless, Tesla is exhibiting some recent signs of a turn around. Over the past two quarters Tesla has beaten Wall Street estimates by double digits and has an average EPS surprise of 5.48% over the past four.
Image Source: Zacks Investment Research
TSLA Implied Post-EPS Move
The options market is currently pricing in a rather subdued post-EPS move of +/- $24 or 6%.
The Legacy EV Business: Volume vs. Margins
Although most investors own Tesla shares because they are betting on future products such as the Optimus humanoid robot and robotaxi, it’s electric vehicle business still comprises the lion’s share (~85%) of its total revenues. Last month, Tesla delivered a spectacular deliver beat when it reported ~480k vehicles for Q2. The 480K delivery number trounced Wall Street estimates of 406k and represented a 25% year-over-year increase.
However, it’s important that investors do not view the delivery number in a vacuum. Amid a sunsetting of the federal EV tax credits and a slowing EV market Tesla has offered generous promotional financing and has slashed prices in key markets such as China and Europe. The question for investors is “Will increased EV sales volumes supersede incentives or will deep discounts erode profit margins?”
Tesla Energy
Tesla’s Energy business continues to be a consistent bright spot for the company. Deployments soared 40% year-over-year. Meanwhile, Tesla is expanding its energy business. SunRun ((RUN - Free Report) ) and TSLA announced a 16GW distributed energy pact targeting utilities and data center operators. Additionally, Tesla brough the largest lithium refinery in the U.S. online earlier this year. While growth will likely continue, investors will be watching to see if CAPEX stabilizes in this segment.
Future Product Timelines
Tesla CEO Elon Musk has a reputation for setting extremely aggressive (and sometimes unrealistic) timelines. While these optimistic timelines can lead to increased productivity, they have been a thorn in the side of Wall Street investors, who are often hyper focused on quarterly results as opposed to long-term results. As a result, investors will want to see progress on Tesla’s Robotaxi & Cybercab commercialization, its FSD adoption rates, and Optimus and AI Compute expansion.
Bottom Line
Tesla’s Q2 EPS will answer important questions about the company’s legacy EV business, energy growth, and future product timelines. If strong delivery volumes can offset incentives and Elon Musk delivers tangible updates on autonomous tech, Tesla shares could finally get the spark they need.
View the Zacks #1 Rank List
Image: Shutterstock
Tesla Q2 EPS Preview: Can Earnings Electrify the Stock?
Key Takeaways
Tesla Q2 Earnings
Zacks Rank #3 (Hold) stock Tesla ((TSLA - Free Report) ) will report earnings on second quarter earnings results on Wednesday, July 22, after the equity market close. Zacks Consensus Analyst Estimates predict that Tesla will earn $0.50 for Q2, up from the $0.41 the company earning in Q1.
Image Source: Zacks Investment Research
Tesla’s Recent EPS History
Tesla’s recent earnings track record has been spotty to say the least. The EV maker has missed Zacks Consensus Estimates in 6 of the past 10 quarters.
Image Source: Zacks Investment Research
Nevertheless, Tesla is exhibiting some recent signs of a turn around. Over the past two quarters Tesla has beaten Wall Street estimates by double digits and has an average EPS surprise of 5.48% over the past four.
Image Source: Zacks Investment Research
TSLA Implied Post-EPS Move
The options market is currently pricing in a rather subdued post-EPS move of +/- $24 or 6%.
The Legacy EV Business: Volume vs. Margins
Although most investors own Tesla shares because they are betting on future products such as the Optimus humanoid robot and robotaxi, it’s electric vehicle business still comprises the lion’s share (~85%) of its total revenues. Last month, Tesla delivered a spectacular deliver beat when it reported ~480k vehicles for Q2. The 480K delivery number trounced Wall Street estimates of 406k and represented a 25% year-over-year increase.
However, it’s important that investors do not view the delivery number in a vacuum. Amid a sunsetting of the federal EV tax credits and a slowing EV market Tesla has offered generous promotional financing and has slashed prices in key markets such as China and Europe. The question for investors is “Will increased EV sales volumes supersede incentives or will deep discounts erode profit margins?”
Tesla Energy
Tesla’s Energy business continues to be a consistent bright spot for the company. Deployments soared 40% year-over-year. Meanwhile, Tesla is expanding its energy business. SunRun ((RUN - Free Report) ) and TSLA announced a 16GW distributed energy pact targeting utilities and data center operators. Additionally, Tesla brough the largest lithium refinery in the U.S. online earlier this year. While growth will likely continue, investors will be watching to see if CAPEX stabilizes in this segment.
Future Product Timelines
Tesla CEO Elon Musk has a reputation for setting extremely aggressive (and sometimes unrealistic) timelines. While these optimistic timelines can lead to increased productivity, they have been a thorn in the side of Wall Street investors, who are often hyper focused on quarterly results as opposed to long-term results. As a result, investors will want to see progress on Tesla’s Robotaxi & Cybercab commercialization, its FSD adoption rates, and Optimus and AI Compute expansion.
Bottom Line
Tesla’s Q2 EPS will answer important questions about the company’s legacy EV business, energy growth, and future product timelines. If strong delivery volumes can offset incentives and Elon Musk delivers tangible updates on autonomous tech, Tesla shares could finally get the spark they need.