Tesla Earnings Preview: Can Energy Storage Offset Margin Squeeze and Disappointing Deliveries?
1min read Tesla is set to release its third-quarter earnings report on Wednesday, with market forecasts indicating a revenue increase of 9.5% year-over-year to $25.57 billion, while earnings per share are anticipated to decrease by 12.1% to $0.52. Analysts suggest that improvements in Tesla's profitability are unlikely, with potential pressure on gross margins due to high production costs and aggressive pricing strategies.
Despite a rebound in vehicle deliveries, Tesla's sales growth has fallen short of market expectations, contributing to concerns about further declines in profitability. The third quarter saw delivery of 463,000 vehicles, marking an increase from the previous year, but aggressive promotion efforts may have compressed profit margins. Tesla’s gross margin might fall to 15%, down from 18% in the previous quarter, as predicted by industry analysts.
Investors are keenly focused on potential updates regarding Tesla's full self-driving (FSD) technology and the development of its Robotaxi fleet. Elon Musk’s commentary in the upcoming earnings call about the production strategy for Robotaxi and other advancements could influence stock performance positively.
Another area of interest is Tesla's energy storage business, which could serve as a cushion during this period of strategic shift. The company deployed 6.9 GWh of storage, a rise of 72.5% compared to the previous year, suggesting robust performance. This segment's revenue might grow by 39.1% to $2.17 billion, and it boasts a higher gross margin than the company's average.
Tesla’s stock has experienced a roughly 10% decline since its last earnings announcement in July, and an additional 7% drop following its recent Robotaxi day. The lack of key details from the event, coupled with absent advancements in affordable car models, has left many investors dissatisfied.
The upcoming earnings release and subsequent investor call are expected to clarify Tesla's path forward regarding vehicle demand, particularly in the stabilizing U.S. and heating Chinese markets. Analysts are watching for indications from Musk about fourth-quarter demand and 2025 projections, which could steer investor sentiment in the coming weeks.
