Earnings Series: TSLA, You Should Know Before Tesla’s Earnings Q4 2023
Key Takeaway
- Tesla’s Q4 earnings report is critical, with Wall Street expecting $0.73 EPS from $25.6 billion in sales, down from last year’s $1.19 EPS.
- Investors are eyeing automotive gross profit margins, which are anticipated to be 16.7%, a decrease from 24.3% in Q4 2022.
- Management’s outlook for 2024 deliveries and updates on Full Self Driving and AI projects will be closely scrutinized during the earnings call.
Tesla’s Earnings Report and Investor Sentiment
Tesla is facing pressure from investors as it prepares to report its fourth-quarter earnings. The company has been cutting prices, impacting profit margins, while also contending with high interest rates and increased competition in the electric vehicle market. Wall Street expects earnings per share of about 73 cents from sales of $25.6 billion, down from $1.19 EPS and $24.3 billion in sales a year ago.
Profit Margins and Sales Outlook
Automotive gross profit margins for the fourth quarter are expected to be 16.7%, down from 24.3% in the same period last year, with Wall Street projecting auto gross profit margins ex-regulatory credits of about 17.8% for 2024 — better than what is forecasted for Q4.
Investors will closely watch management’s outlook for 2024 sales, with expectations ranging between 2.1 million to 2.2 million units delivered, up from 1.8 million sold in 2023.
Other Considerations: Full Self-Driving Business and Musk’s Ownership Stake
Analysts are looking for greater transparency regarding Tesla’s Full Self Driving (FSD) business and would like to see FSD-related sales and spending disclosed similar to Meta Platforms’ investment in the Metaverse.
Elon Musk might also address his tweets threatening to move new AI and robotics projects outside Tesla if his ownership stake isn’t boosted from roughly 20% to 25%. Any indication of discord between Musk and the Tesla board would be unwelcome news for investors.
STREET VIEWS
Gary Black, Future Fund Active ETF (Neutral on Tesla):
> Wall Street clearly expects auto gross margins to bottom.
Ben Rose, Battle Road Research Analyst (Bullish on Tesla):
> It is time to provide greater transparency regarding [Tesla’s] Full Self Driving business.
WHEN
Tesla TSLA is set to post fourth-quarter 2023 results on Jan 24, after the closing bell.
