Tesla Earnings Preview- What to watch
Tesla is set to report its Q2 2024 earnings this afternoon, with current revenue expectations at $24.3 billion and EPS projections of $0.61. Recent positive developments, such as better-than-feared deliveries and high short interest, have boosted Tesla's stock, although the delay of the Robo event and a broader tech selloff have tempered gains.
Analysts await discussions around core automotive gross margins and strong energy sector performance. Investors are keen to hear updates on the delayed August 8th Robotaxi event, as well as Tesla's strategies for handling competitive pricing in China, where the company has lost market share.
Analysts from Guggenheim highlight key points of interest, including the potential volume guide for 2024, updates on Full Self-Driving (FSD) technology, and auto gross margins, which are anticipated to be around 15.0-15.5%. Positive free cash flow (FCF) is expected in Q2, supported by inventory reductions, although challenges remain in achieving growth amidst competitive pricing pressures in China and Europe. Additionally, Tesla's pricing strategy and the sustainability of Q2 deployments in the energy sector will be under scrutiny.
Tesla's demand for electric vehicles (EVs) appear to have plateaued, with deliveries averaging around 434,000 over the past seven quarters. FY2024 deliveries are tracking at approximately 1.75 million units, a 3% year-over-year decline.
Tesla's Q2 delivery figures, which showed a 14.8% sequential increase despite a 5% year-over-year decline, indicate a reversal of inventory buildup. The company reported better-than-expected deliveries earlier this month, which many analysts see as a turning point. Mizuho notes that while the Robotaxi and humanoid robot projects hold long-term promise, they also pose significant challenges and could impact valuation estimates.
Elon Musk's recent confirmation of the Robotaxi event delay without a new date raises questions, but the emphasis on AI and autonomous driving remains strong. Tesla's advancements in AI training, particularly through its extensive real-world driving data, could position it as a leader in the autonomous vehicle market. Additionally, Tesla's new data center extension near Giga Texas, equipped with advanced AI computing power, may accelerate FSD advancements.
China remains a critical market for Tesla, accounting for over 20% of its total revenue. Despite competitive pressures from domestic EV manufacturers like BYD, which posted strong volume growth, Tesla's technology and brand strength provide a solid foundation for long-term growth. Analysts are optimistic about Tesla's ability to leverage its leading technology and vast AI training data to maintain its market position.
Overall, while Tesla faces challenges in maintaining delivery growth and navigating competitive markets, its strong technology base, recent delivery outperformance, and strategic focus on AI and autonomous driving provide a positive outlook for the company's future performance. Investors will be closely watching the Q2 earnings report for insights into Tesla's strategies and progress on these fronts.