Tesla ( DSLA ) will report first-quarter earnings after hours on Tuesday, providing a much-needed update on investor sentiment slides into the EV maker's current and future prospects.
Tesla's Q1 is nothing short of a rollercoaster ride. Shares were hit hard after the company reported disappointing Q4 results, offering weak and limited 2024 delivery guidance, missing Q1 deliveries, and not denying reports of a sub-$30,000 volume EV's demise. Tesla's stock is down 43% year to date and 19% during its current seven-day losing streak.
For the quarter, Tesla is expected to report adjusted earnings per share of $0.52 on top-line revenue of $22.31 billion, according to Bloomberg consensus estimates. It was its first revenue drop in four years.
In terms of profits, Tesla is expected to show an operating profit of $1.49 billion, a 40% decline from a year ago. Based on non-GAAP metrics, the Street estimated adjusted net income of $1.79 billion and EBITDA of $3.32 billion.
The revenue drop and profit decline follow Tesla's weaker-than-expected quarter of sales. In Q1, Tesla reported 386,810 global deliveries, below estimates of 449,080, and produced 433,371 vehicles, also below estimates of 452,976.
The difference between production and sales of around 46,500 vehicles led to concerns of a global slowdown in demand for Tesla vehicles, leading to continued price cuts. Also on Monday, Tesla cut prices for vehicles in the US and China, leading to stock weakness during the day.
Investors will also be looking at Tesla's future product roadmap. The long-awaited next-generation platform, a sub-$30,000 mainstream EV (called the Model 2) was seen as a big volume play for Tesla, which will use a revolutionary “unboxed” product line to build these vehicles more affordably.
After Reuters reported that Tesla was canceling the cheaper EV, Musk responded In XEarlier on Twitter, Reuters “lyed (again)” before returning to the stage to announce the launch of the robotaxi, which was widely understood to have no steering wheel or pedals. Whether Tesla will eventually release a lower price is still an open question. The cost is EV.
According to analysts, moving to robotaxis as opposed to a cheaper EV is fraught with risks.
Tesla gave up a “key reason” for many to hold the stock: Model 2 as a volume play that “will reaccelerate volume, margins and FCF. [free cash flow],” Deutsche Bank's Emmanuel Rosner wrote in a note earlier this month. Tesla's self-driving car is based on cracking the code, which would mean navigating several regulatory hurdles and getting enough data to train the software.
Analysts like Bank of America's John Murphy believe the Model 2 isn't dead yet.
“During the 4Q24 earnings call, management noted that the vehicle is under development and has an optimistic SOP [start of production] will be for [the second half of 2025], but CEO Elon Musk acknowledged that the manufacturing process may be slower than expected due to the introduction of new technology,” Murphy wrote in a note to clients on Monday. “In our view, Tesla is still developing the Model 2 because it is a fundamental part of the company's growth story.”
Finally, Tesla may address (and be heard on the post-earnings conference call) other areas of the core business, such as Tesla's recently announced 10% layoff level and management's stance on new shareholder votes. June. The votes deal with a change to Tesla's merger status and whether to approve Musk's controversial pay package from 2018, which was struck down by a Delaware court.
Press Subramanian is a Yahoo Finance reporter. You can follow him Twitter And on Instagram.
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