Technology
Wednesday, October 23rd, 2024 5:50 pm EDT
Key Points
- Earnings Expectations and Vehicle Deliveries: Tesla is set to report its third-quarter earnings, with analysts anticipating earnings per share of 58 cents and revenue of $25.37 billion. The company delivered 462,890 vehicles during the quarter, marking a 6% increase year-over-year but falling short of analysts’ expectations after two quarters of declines.
- Political Activism and Investor Concerns: CEO Elon Musk’s active campaigning for Donald Trump raises questions among shareholders about the potential impact on Tesla’s stock. Musk has spent considerable amounts on Trump’s campaign despite the former president’s opposition to federal EV support and environmental regulations that have previously benefited Tesla.
- Competitive Pressure and Future Growth: Tesla faces increased competition from both legacy automakers like Ford and General Motors and new Chinese entrants like BYD and Nio. Analysts note that Tesla’s growth may be subdued over the next two years as core models age, suggesting a closing gap with competitors, which has led to recommendations to hold the stock.
Tesla is preparing to report its third-quarter earnings after the close of trading on Wednesday, with analysts projecting earnings per share of 58 cents and revenue of $25.37 billion, as per LSEG consensus estimates. Earlier in the month, Tesla revealed it delivered 462,890 vehicles in the third quarter, a 6% increase from the previous year, although this number fell short of analyst expectations. The company produced 469,796 electric vehicles during the same period. Despite the uptick in deliveries, the figures follow two consecutive quarters of year-over-year declines, indicating a challenging environment for the automaker. To boost sales, Tesla has implemented various discounts and incentives, which may further pressure its profit margins.
This earnings report comes on the heels of a highly anticipated robotaxi event that left shareholders seeking more clarity and occurs shortly before the presidential election, which has recently occupied CEO Elon Musk’s attention. Musk has been actively campaigning for Republican nominee Donald Trump, which has raised concerns among investors regarding how his political activities may affect Tesla and its stock price. Musk has invested tens of millions in supporting Trump, even as the former president has not favored the federal spending initiatives that have historically benefited Tesla. At a recent event, Musk expressed skepticism towards government regulations, suggesting they are largely ineffective and unnecessary.
Tesla is also navigating increased competition, particularly in China, from companies like BYD and Geely, as well as new players like Li Auto and Nio. In the U.S., traditional automakers such as Ford and General Motors are ramping up their electric vehicle offerings, despite scaling back previous electrification commitments. Analysts at Jefferies noted that Tesla’s performance indicates the competitive gap with legacy manufacturers is closing, particularly against Chinese competitors. They highlighted that Tesla is no longer constrained by capacity but is entering a phase of subdued growth over the next two years as its core models age.
Investor inquiries prior to the earnings call have focused on Tesla’s advancements in developing dedicated robotaxis, self-driving technology, and humanoid robots. There is also a keen interest in the performance and reception of the Cybertruck, which, despite experiencing quality issues, has sold over 16,000 units in the U.S. during the third quarter, according to Kelley Blue Book estimates. Although Tesla has not provided specific guidance for 2024, company executives have indicated that they anticipate a lower delivery growth rate compared to the previous year. Year-to-date, Tesla shares have decreased by 13%, contrasting with a 23% increase in the Nasdaq index.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/10/23/tesla-tsla-q3-2024-earnings-report.html
