Earnings day arrives for Tesla Inc. with the EV maker and the stock under a cloud.
The EV maker is scheduled to report fourth-quarter results Jan. 25 after the bell. A call with analysts and others is set for 5:30 p.m. Eastern.
announced price cuts in the U.S. and Europe earlier in January in a bid to gain or retain market share and heat up demand as startup EV makers as well as legacy auto makers have broadened their electric-vehicle offerings.
The move also means some Tesla cars will qualify for tax breaks and take a hit on margins — and earnings.
“The price cuts have a huge impact on (Tesla’s) economics,” Toni Sacconaghi at Bernstein said in a recent note, taking the opportunity to lower his 2023 per-share earnings expectations to $3.80 from $4.96, which was around consensus.
To Sacconaghi, Tesla may have miscalculated.
The arrival of its Cybertruck will help Tesla in 2024, but “the key challenge for Tesla is that it needs more, lower cost EV offerings, and we don’t expect a new, low cost offering to ship in volume until 2025, by which time Tesla will face even more EV competition,” the analyst said.
Tesla has said that the Cybertruck, a futuristic-looking all-electric pickup truck, is on track to start production in mid-2023. Investors will be looking for any updates on that timeline.
“Tesla’s apparent key miscalculation was its belief that Model 3 and Y could collectively sell (3 million to 4 million) units annually,” enough to sustain growth through 2024 until a model would arrive.
Emmanuel Rosner at Deutsche Bank had a different take on the price cuts.
Instead of an action that will put pressure on margins and earnings, “we believe this likely is a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority,” Rosner said.
Here’s what to expect:
Earnings: Analysts polled by FactSet expect Tesla to report adjusted earnings of $1.15 a share in the fourth quarter, which would compare with adjusted earnings of 85 cents a share in the fourth quarter of 2022.
Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted profit of $1.23 a share for Tesla.
Revenue: The analysts surveyed by FactSet are calling for sales of $24.96 billion for Tesla, which would compare with $17.72 billion in the fourth quarter of 2022. Estimize is expecting nearly the same at the moment, $24.97 billion in revenue for the quarter.
Stock price: Tesla stock has been hovering around two-year lows for the past few months, and slipped under $200 in early November. In the past 12 months, the stock has lost 63%, compared with losses of around 14% for the S&P 500 index.
What else to expect: There might be a new person on the post-results call: Tom Zhu, Tesla’s top executive in China, took the reins of the U.S. factories as well as sales in North America and Europe, according to reports. Tesla has yet to make his new role official.
Tesla’s executive team has been relatively stable for the past couple of years, following a spate of departures in 2018 and 2019, including the exit in July 2019 of Chief Technology Officer J.B. Straubel.
Chief Executive Elon Musk said in mid-December he’d step down from Twitter Inc. as soon as he finds “someone foolish enough to take the job,” but so far there are no indications that a successor is in the wings.
Musk bought the social-media company in October, presiding over months of turmoil and layoffs and also selling millions of dollars in Tesla stock to fund the deal.
Key Tesla investors, including one who hopes to become a Tesla board member, have pleaded with Musk to focus on Tesla and try to stanch the stock’s losses.
Investors will also keep an eye on Tesla’s 2023 guidance. For most of last year, the EV maker kept an official guidance of 50% average annual sales growth.
Tesla in early January reported that it delivered 1.31 million cars in 2022, up about 40% from 2021. Wall Street expects deliveries, a proxy for sales, of $1.9 million vehicles in 2023.