TSLA -1 to 208, might report "better than feared" numbers according to this earnings preview -
briefing -
Tesla earnings preview -- Stock can regain its charge with better-than-expected report, but price cuts and ramp of Cybertruck could further pressure margins (209.11 -0.03)
After the close, Tesla (TSLA) is scheduled to report Q4 earnings with a conference call set to follow at 5:30 p.m. ET. The electric vehicle maker's earnings report is expected to be posted on the Investor Relations page of its website at about 4:05 p.m., followed soon thereafter by a press release.
The FactSet consensus estimates for EPS and revenue are $0.73 and $25.6 bln, respectively.
TSLA is coming off one of its worst earnings reports in recent history, missing EPS and revenue expectations for the first time since 2Q19. The main culprit continues to be TSLA's eroding margins as the company looks to keep demand healthy in a high interest rate environment by cutting prices.
In Q3, gross margin dipped by 30 bps qtr/qtr to 17.9%, while operating expenses jumped by 43% as TSLA ramped up investments in AI and full self-driving technologies and poured capital into the December launch of Cybertruck. Planned factory shutdowns were another factor, causing manufacturing efficiencies to decrease.
Gross margin and automotive gross margin will once again be front-and-center for tonight's earnings report. On the plus side, factory utilization should be higher in Q4, driving stronger efficiencies, while supply chain costs also improve. However, further price cuts and the launch of Cybertruck will counteract those tailwinds.
Labor costs are another item to keep an eye on. In December, union strikes in Sweden and Denmark struck TSLA, potentially leading to a less favorable collective bargaining agreement for the company.
On January 2, TSLA reported strong Q4 deliveries of 484K vehicles (+20%), edging past analysts' expectations. The outperformance was likely aided by a boost in orders ahead of the new year due to TSLA losing the $7,500 federal tax credit for 2024. In order to qualify for the EV tax credit, the manufacturer must not source any battery components that are manufactured or assembled by a foreign entity of concern, including entities owned or controlled by the governments of China, Russia, North Korea, and Iran. It appears that TSLA did not meet that criteria.
In the shareholder deck, TSLA will likely provide production and delivery guidance for 2024. Last year, TSLA said that it expected to remain ahead of the long-term 50% CAGR with around 1.8 mln cars for the year. The company reached that goal, achieving total deliveries of 1,808,581 for 2023.
Last quarter, Elon Musk was a little more cautious about TSLA's production growth moving forward, stating that it's impossible to sustain a compound growth of 50% forever.
An area where Musk is expected to be quite exuberant about is AI and Dojo, TSLA's supercomputer that will power its full self-driving technology. Musk has proclaimed that Dojo and FSD will ultimately make the company's current financial metrics "look silly", but offered no timeline for when that may occur.
On December 1, the highly anticipated Cybertruck launch took place, but it didn't live up to the hype as TSLA disclosed that its most affordable version (which costs about $61K) won't be available until 2025. That starting price also happens to be about $20K more than TSLA had forecasted. Nonetheless, commentary regarding orders and production targets for Cybertruck will be of interest. TSLA has previously stated that its annual production target for Cybertruck is 250K.
Lastly, the stock has been stuck in reverse so far in 2024, falling by about 16% year-to-date, reflecting muted expectations and potentially setting the stock up for a rebound on a better-than-feared report. (PVIEW)
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