Wednesday’s Tesla Q4 earnings report after the bell will be a big one — especially considering Tesla shares are hovering at 2-year lows.
Wall Street is expecting Tesla (TSLA) to report:
That revenue figure would represent another record high for Tesla, up over $2 billion sequentially from Q3 and nearly $7 billion from a year ago.
On the profitability end, Tesla is expected to report adjusted net income of $3.98 billion, around $300 million more than Q3, and over $1.3 billion more than a year ago.
While Tesla instituted a number of price cuts in the U.S., China (for the second time), and some European markets, those cuts did not happen until Q1 of this year, so those effects won’t be seen in Q4 results. However, investors will still be keen to track gross margin figures, which last quarter came in at 25.1%, with automotive gross margin hitting 27.9%. Both are the envy of the automotive world (last quarter GM’s EBIT adjusted margin stood at 9.4%).
“The big question mark going into earnings is how much will recent price reductions impact gross margins,” Canaccord Genuity analyst George Gianarikas said in an interview with Yahoo Finance. While Gianarikas sees margins coming down this year, he has a positive long-term view on Tesla’s gross margins, claiming that the relatively high margins coming from sales of FSD (full-self driving) software combined with commodities prices going down, will keep margins healthy in the years to come.
Looking ahead to the earnings call, investors and analysts will be focused on any clues to the demand story for Tesla, and whether those steep price cuts across the board are boosting deliveries in Q1.
“We don’t think most investors appreciate the extent to which lower pricing could support Tesla’s market share,” Piper Sandler analyst Alexander Potter wrote in a note to clients late last week. “This is particularly true in the United States where lower prices, combined with a $7,500 tax credit, could unlock at least 300K units of incremental demand (if not twice that).” Potter currently has an ‘overweight’ rating on the stock, and $300 price target.
Tesla’s long-term delivery target of 50% CAGR (compound annual growth rate) has remained in place despite deliveries missing the mark in recent quarters. Analyst like Dan Ives of Wedbush have called on CEO Elon Musk and Tesla’s management to bring down that target in line with recent results. However, with recent price cuts reportedly boosting deliveries, and factory ramp ups ongoing at Giga Berlin and Giga Austin, it’s possible Tesla will keep its long-term delivery growth target intact.
Looking further ahead, investors and analysts will be waiting to hear any incremental data points on the Cybertruck release later this year, any new information on the upcoming gen-3 robotaxi platform, succession plans for CEO, and the latest on full self-driving technology (and federal investigation into its safety).