Tesla, Inc. (TSLA) is set to release its fourth-quarter results on January 24th, and analysts are predicting lower revenue and earnings compared to the previous year. The company’s quarterly scorecard will be closely watched, with three key numbers being of particular importance.
The first number to watch is the fourth-quarter adjusted earnings per share (EPS). Analysts’ consensus calls for 73 cents, which would represent a 39% year-over-year drop. This decline in earnings is likely due to several factors, including increased competition in the electric vehicle market and supply chain challenges.
The second number to watch is the auto gross margin, excluding regulatory credit. Analysts estimate a margin of 17%, slightly higher than the 16.3% reported in the third quarter. This margin represents the profitability of Tesla’s core automotive business, excluding any regulatory credits it receives. A higher margin would indicate improved efficiency and cost management.
Lastly, analysts are also keeping an eye on Tesla’s 2024 deliveries. The consensus estimate is 2.195 million deliveries, marking a 21.1% year-over-year increase. This is an important metric as it reflects the company’s ability to meet its production targets and satisfy customer demand.
However, Future Fund Managing Partner Gary Black believes that the consensus core auto gross margin estimate of 17% is too high. He instead sees the number at 16%, which would result in adjusted earnings per share of 70 cents. Black’s view suggests that Tesla’s profitability may not be as strong as some analysts expect.
Tesla shares have been on a downtrend since the company reported its third-quarter results in mid-October. The disappointing results and concerns about competition have weighed on the stock. Even the highly anticipated Cybertruck launch in late November failed to boost the stock price.
Despite the recent sell-off, Black believes that the negative sentiment surrounding Tesla is overdone. He points to upcoming catalysts such as fourth-quarter earnings, volume guidance for 2024, the Cybertruck launch, and the introduction of a $25,000 next-generation vehicle. Black also highlights the expiration of the $7,500 US EV rebate and the imminent release of Tesla’s Full Self-Driving Level 4 technology as potential drivers of future growth.
Tesla’s stock ended the last trading session down 3.67% at $218.89, and it has lost about 12% so far in January. The renewed price cuts in China have contributed to the recent sell-off. However, Black remains optimistic about the company’s prospects and believes that the current valuation does not reflect its true potential.
In conclusion, Tesla’s upcoming fourth-quarter results will be closely watched by investors and analysts alike. The company is expected to report lower revenue and earnings, but there are potential catalysts on the horizon that could drive future growth. Whether Tesla can meet its production targets and maintain its profitability will be key factors in determining its stock performance in the coming months.
