Tesla Earnings Preview: Can Q3 Results Offset Recent Investor Disappointment?

Tesla is set to announce its third-quarter results for the 2024 fiscal year on October 23rd, post-market. Analysts project revenue to hit $25.42 billion, an increase of 9% year-on-year, while earnings per share are expected to decline by 4% to $0.51.

Over the past eight quarters, Tesla has only surpassed earnings expectations four times, and notably, its stock price has risen on earnings day just 25% of the time, with average fluctuations of ±10.37%. The maximum recorded increase was 12.06%, while the biggest drop was 12.33%.

Recent developments surrounding Tesla's "We, Robot" event left investors disappointed. Tesla's shares plummeted by nearly 9% in a single day, marking a monthly low. During the event, Tesla introduced its Robotaxi products, including the Cybercab, an autonomous van, and a humanoid robot named Optimus. The lack of substantial updates and clear plans contributed to the stock's decline.

Analysts emphasize the importance of Tesla's fundamentals, noting a disconnect between its elevated valuation and stalled profit growth. Tesla's market valuation heavily depends on its unproven ventures in autonomous driving and robotics. As traditional markets challenge Tesla, its core revenue is still primarily driven by electric vehicle sales.

Q3 deliveries surpassed expectations, with 463,000 vehicles sold globally, showing a quarterly growth after previous declines. However, intense competition and slowing demand continue to pressure Tesla's vehicle pricing and profit margins. Analysts predict further margin erosion in Q3, following a Q2 gross margin dip to 18%.

Tesla's energy storage segment also faces headwinds, with declining quarterly deployments affecting growth. Tesla highlighted the irregular nature of energy milestones due to large installation projects, explaining the variance in storage numbers.

Looking forward, Tesla’s ability to manage costs and optimize unit economics remains in focus. Market observers await insights from the upcoming earnings report to reassess Tesla's positioning amidst evolving industry dynamics.