Tesla, the most valuable auto stock globally and led by the world’s wealthiest individual, has consistently been a topic of interest among investors. Given its volatile nature, Tesla’s earnings announcements are highly anticipated events.
For the third quarter, investors should pay close attention to two crucial aspects: automotive gross profit margin and pricing. In an effort to boost sales volume amidst rising interest rates, a slowing economy, and increased competition in the electric vehicle (EV) industry, Tesla has significantly reduced prices multiple times in recent months. As a result, year-to-date volumes have surged by approximately 45% compared to the previous year. Wall Street analysts are projecting earnings per share of 72 cents from sales amounting to $23.9 billion for this quarter.
However, this increase in sales volume has come at the expense of profit margins. It is expected that automotive gross profit margins for the third quarter will be below 18%, a notable decrease from the 25% margin recorded a year ago. Investors should consider a result between 17% and 18% as satisfactory. Anything below this range might raise concerns. Additionally, investors will be keen to hear indications that future price cuts will be minimized and that profit margins are poised for improvement in subsequent quarters.
Tesla’s next earnings report promises to be an essential event for discerning investors. Focusing on automotive gross profit margin and pricing will provide valuable insights into the company’s financial performance and prospects moving forward.
Tesla Reports Q3 Earnings: Key Takeaways
Investors are closely monitoring Tesla’s Q3 results, with a particular focus on margins, software sales, and the impact of the price cut on full self-driving (FSD) technology.
Tesla recently reduced the price of its FSD driver assistance product from $15,000 to $12,000 in September. Despite the lower price, the company expects higher FSD uptake, which could positively impact overall margins.
During Tesla’s conference call, self-driving technology is usually a hot topic. However, this time, the discussion might be overshadowed by the highly-anticipated Cybertruck. Investors are eager to learn about delivery timelines and production capacity for the next few months. Currently, expectations for Cybertruck are not excessively high; investors simply want to see vehicles on U.S. roads.
Based on options markets, it is predicted that Tesla’s stock will experience a 6% move either up or down following the earnings release. Historically, the stock has seen an average movement of approximately 9% after each quarterly report, rising once and declining three times.
In the past 12 months, Tesla’s stock has gained around 16%, slightly trailing behind the S&P 500 and Nasdaq Composite, which have risen by approximately 18% and 26% respectively. As of premarket trading on Wednesday, Tesla shares were down 0.6%.
Overall, investors are closely tracking Tesla’s Q3 performance, particularly examining margins, software sales, FSD uptake, Cybertruck delivery updates, and the potential impact on stock movement.