Tesla Inc (TSLA) poised for growth in 2024 despite margin concerns

Key Takeaways: 

- Tesla is set to report its fourth-quarter financial results after market close on January 24. 

- Analysts expect the company to report fourth-quarter revenue of $25.547 billion and earnings per share of 74 cents.

- Tesla delivered 484,507 units and produced 494,989 units in the fourth quarter, representing year-over-year increases of 19.55% and 12.57%, respectively. 

- Analysts are watching for updates on the Cybertruck, next-generation vehicle launch, and the timeline for FSD Version 12. 

- Tesla recently slashed Model Y prices in Europe and China, adding to concerns about profit margins in 2024. 

- The company's ability to navigate challenges such as supply chain disruptions and price cuts will be a key focus in the earnings report.

Tesla Inc (TSLA) is set to release its fourth-quarter financial results January 24 after market close, and investors are eagerly anticipating the company's performance. Despite missing estimates in the third quarter, Tesla saw strong fourth-quarter deliveries, beating analyst expectations. This has led to a positive outlook for the company's earnings report. 

Analysts expect Tesla to report fourth-quarter revenue of $25.547 billion and earnings per share of 74 cents. In the previous fourth quarter, Tesla reported revenue of $24.318 billion and earnings per share of $1.19. It is worth noting that Tesla has beaten or matched earnings per share estimates in nine of the past 10 quarters and beat revenue estimates from analysts in seven of the past ten quarters. 

The company previously reported fourth-quarter production and delivery figures. Tesla delivered 484,507 units and produced 494,989 units, representing year-over-year increases of 19.55% and 12.57%, respectively.

Tesla recently slashed Model Y prices in various European countries, following similar price cuts in China. This has led to concerns about profit margins for the company. However, it is important to note that Tesla had already offered major discounts on Model Y inventory in Europe, so the actual selling prices may not fall as much as the new reductions suggest.

Investors will be closely watching several key items in Tesla's earnings report. These include the timing of the next-generation vehicle launch, the number of Cybertruck orders, the release of FSD Version 12, and the timeline for mass production of the Tesla Semi. 

Additionally, Elon Musk's recent comments about wanting more ownership of Tesla stock to increase his artificial intelligence initiatives with the company may also be discussed. 

Cybertruck was a key topic during the third-quarter results with a release date officially announced. While Tesla will not likely break out the number of Cybertruck deliveries in the fourth quarter, investors would like to hear more on delivery estimates for 2024 and how many people remain on the reservation list after official pricing came out.

Deepwater Asset Management co-founder and Tesla investor Gene Munster believes that margins will be a key factor to watch in Tesla's earnings report. While he expects a slight improvement quarter over quarter, he believes that the outlook for margins in 2024 will be for stabilization rather than expansion. Munster also highlights the importance of the Cybertruck, Full Self-Driving (FSD) updates, and Tesla's market share of electric vehicles in the US. 

Morgan Stanley analyst Adam Jonas has lowered the price target on Tesla shares, citing evidence of a challenging global electric vehicle market due to growing supply and slowing demand. However, Jonas' price target does not include valuation for the Optimus Bot, which he hopes to learn more about at the 2024 Tesla AI Day. 

Wedbush analyst Daniel Ives commends Tesla's fourth-quarter deliveries as a major achievement and highlights China as a clear area of success for the company. Ives predicts that Tesla will introduce a sub-$30k vehicle by the end of 2024, which could significantly impact the company's unit volumes. 

Overall, Tesla's growth potential in 2024 remains attractive, despite concerns about margin compression and pricing cuts. The company's strong delivery numbers and success in markets like China indicate a positive outlook for the future. While near -term stock pressure may be driven by significant negative earnings per share revisions, the long-term investment thesis for Tesla remains intact.

In conclusion, Tesla's fourth-quarter earnings report will provide valuable insights into the company's performance and its growth potential in 2024. Despite margin concerns and pricing cuts, Tesla's strong delivery numbers and global success position it as a leader in the electric vehicle market. Investors should carefully analyze the earnings report to make informed financial decisions regarding their investments in Tesla.

$TSLA(TSLA)