There are unusually high stakes surrounding Tesla’s upcoming earnings report, as Wall Street prepares for what is expected to be the company’s worst quarter in years by most mainstream metrics and investors prepare for more details on projects the company’s enigmatic CEO Elon Musk claims he’s close to betting the $450 billion company on.
Key facts
- “Expect some fireworks,” predicted UBS analyst Joseph Spak, reflecting the general belief that Tesla’s first-quarter results, due shortly after 4 p.m. EST on Tuesday, will feature plenty of highlights (and lowlights) for those closely following the company.
- In terms of actual financial results, expectations peg 2024’s first quarter to bring forth a host of negative superlatives for Tesla.
- Consensus analyst forecasts of $0.49 earnings per share imply it will be Tesla’s least profitable quarter since 2021’s second quarter, estimates of $22.2 billion indicate the worst overall sales since 2022’s third quarter and estimates of a 5% year-over-year decline in revenue would mark Tesla’s first negative annual sales growth since 2020’s second quarter, during the dregs of the COVID-19 pandemic.
- As consensus already bakes in a brutal quarter, reflected in Tesla stock’s dismal start to the year, likely the more intriguing event on Tuesday is the earnings call featuring Musk, which Wedbush analyst Dan Ives recently declared “one of the most important moments in the company’s history.”
- Considering Tesla is clearly grappling with a cyclical downturn, analysts largely agree there are two major areas Musk must address to massage worst-case scenario ideations and convince investors Tesla is indeed “between two major growth waves,” as Musk claims: Robotaxis, its proposed network of cabs running on autonomous driving technology, which Musk said Tesla is going “balls to the wall” for, and Model 2s, its long-anticipated cheaper electric vehicle line which Reuters reported earlier this month was cancelled, a report Musk refuted.
- “We suspect [Tesla] will try to shift the narrative to the future…but in our minds, Model 2 clarity is key,” summarised Spak.
- Still, it’s entirely possible Musk and company don’t provide many concrete answers, noted Bank of America analysts led by John Murphy, who said they “expect some high-level comments” Tuesday but nothing to truly move the needle on expectations for Tesla’s self-driving sprint.
Big number
23%. That’s how much Tesla share prices have declined since Jan. 25, the day after its most recent earnings report.
Such a freefall without fresh financial results, or other major catalyst event, like a merger or acquisition, is indicative of Wall Street’s deteriorating confidence in Tesla.
The automaker’s price-to-sales valuation, which measures a company’s total market value to its revenues and for which a higher value reflects more belief in a company’s ability to grow its business, is at its weakest level since the first half of 2020.
Key background
Earlier this month, Tesla said it delivered 387,000 electric cars to customers during the first three months of the year, 9% below 2023’s first quarter and reflecting the collapsing demand for its cars, especially in China, even as it significantly slashed prices.
Tesla announced last Monday it will lay off more than 10% of its employees, a decision Musk attributed to the company’s slowing growth.
Earnings tend to bring significant volatility for Tesla’s share price, as its stock has moved more than 9% during its first day of trading after each of the company’s last six earnings reports.
Crucial quote
“If Musk is flippant again and there is no adult in the room on this conference call, with no answers, then, darker days are ahead,” forecasted Ives.
Forbes valuation
We estimate Musk’s net worth at $176.2 billion, making him the third-richest person in the world, behind LVMH’s Bernard Arnault and Amazon’s Jeff Bezos.
This article was first published on forbes.com and all figures are in USD.
