Tesla's Earnings: What Analysts Expect and Why It Matters

As Tesla (TSLA) prepares to release its fourth-quarter 2024 earnings on January 29, investors are eagerly awaiting the results. The electric vehicle (EV) giant has had a rollercoaster year, and analysts have mixed expectations for the upcoming report. Let's dive into what analysts think of Tesla stock ahead of earnings and why their opinions matter.



Analysts' Expectations for Q4 2024 Earnings

Analysts' expectations for Tesla's Q4 2024 earnings indicate a projected EPS of 76 cents and revenues of $27.61 billion. This represents a year-over-year increase of 7% in earnings and 9.7% in revenues. However, the earnings estimate has been revised downward by 1 cent over the past 30 days, signaling cautious investor sentiment.



Tesla's Historical Performance and Earnings Surprises

Tesla's historical performance shows that the company has missed EPS estimates thrice and beat once in the trailing four quarters, with an average earnings surprise of 0.13%. This mixed performance contributes to the cautious expectations for the upcoming quarter.

Factors Shaping Analysts' Expectations

Several factors shape analysts' expectations for Tesla's Q4 2024 results:

1. Deliveries Performance: Tesla recorded a 2.3% year-over-year increase in deliveries, but they fell short of the expected 517,043 units. This slight miss in delivery forecasts raises questions about the operational challenges the company may face, such as supply chain disruptions, production bottlenecks, or shifts in consumer demand.
2. Energy Division Growth: The Energy Generation and Storage business reported a remarkable 110.6% increase in revenue year-over-year. This growth highlights the division's capacity to serve as a significant revenue stream, balancing challenges in the core automotive segment.
3. Zacks Earnings ESP Insights: The Earnings ESP model predicts a -2.65% variance, suggesting Tesla might not beat the current earnings projections. This estimate stems from mixed signals, reinforcing the unpredictable nature of the company's earnings outlook.

The Impact of Delivery Numbers on Investor Sentiment

Tesla's delivery numbers have traditionally been a key metric for investors to gauge the company's performance and growth potential. However, a shift in investor sentiment has led to a decreased emphasis on delivery figures, with the focus now more on the company's advancements in artificial intelligence (AI) and Full Self-Driving (FSD) capabilities.



Analysts' Perspectives on Tesla's Competitive Edge and Growth Prospects

Analysts have mixed views on the potential impact of regulatory changes, such as the rollback of EV tax credits and Trump's plans to raise tariffs on Chinese imports, on Tesla's competitive edge and growth prospects. Some, like Barclays, believe that a slight near-term volume miss could dampen Tesla's AV/AI push, including its Unsupervised FSD launch in 2025. However, Tesla CEO Elon Musk has downplayed the potential impact of regulatory changes, noting that while such changes might slightly affect Tesla, they would be devastating for competitors.

Tesla's dominant scale and brand recognition may allow it to thrive even in a subsidy-free environment. Musk had projected 20-30% delivery growth for 2025 on the last earnings call, indicating confidence in the company's ability to navigate regulatory changes. Additionally, Trump's plans to raise tariffs on Chinese imports could hinder affordable EV manufacturers like BYD Co and NIO from gaining ground in the United States, reinforcing Tesla’s competitive edge.

Moreover, with Musk leading the newly formed Department of Government Efficiency, regulatory simplifications for autonomous vehicle deployment could act as a tailwind for Tesla’s plans to expand Full Self-Driving capabilities and launch a robotaxi fleet. These factors suggest that analysts assess the potential impact of regulatory changes on Tesla's competitive edge and growth prospects as manageable, with the company's scale, brand recognition, and strategic positioning allowing it to adapt and thrive in a changing regulatory environment.

In conclusion, analysts' expectations for Tesla's Q4 2024 earnings reflect a cautious yet optimistic outlook, with a focus on the company's operational challenges and growth potential in its energy division. The mixed historical performance and recent delivery results contribute to the nuanced expectations for the upcoming quarter. As Tesla continues to innovate and adapt to regulatory changes, investors should stay tuned for the company's earnings report and the insights it provides into the company's future trajectory.