Tesla Stock (NASDAQ:TSLA)
Tesla had a quarter with results that were in line with expectations, reporting sales of $23.5 billion and earnings per share of 86 cents. Both figures are, to a large extent, in keeping with what Wall Street was anticipating.
Following a dip of 2% during regular trading hours on Wednesday, Tesla stock has decreased by 1.7% in trading conducted after regular market hours.
This is brand-new information. Make sure to check back for any updates. You can get an idea of earnings by reading the following.
As of Wednesday evening, it is anticipated that Tesla (NASDAQ:TSLA) will post lower earnings on greater sales. This comes after the electric vehicle manufacturer cut prices once more in an effort to attract customers.
The electric vehicle (EV) conflict, in which conventional car manufacturers are investing billions of dollars to catch up to Tesla (NASDAQ:TSLA), has evolved into a price war. Investors will be able to determine who is ahead thanks to the quarterly earnings report from the automaker.
According to FactSet, the financial community on Wall Street anticipates earnings of approximately 85 cents per share from Tesla’s revenue of $23.7 billion. Prior to this, Tesla had recorded earnings of $1.07 per share on sales of $18.8 billion.
In January, Tesla made major price reductions throughout its lineup of automobiles, and these price reductions had a negative impact on the company’s profitability. Tuesday saw yet another round of pricing reductions for electric vehicles produced by the manufacturer. According to the official website of the company, the price of a Model 3 with the rear-wheel drive was reduced by $2,000 and is now $39,990. The price of the Model Y, as well as performance and long-range vehicles, was reduced by $3,000 as well. Since the beginning of 2023, the cost of several Tesla vehicles has decreased by almost one quarter.
In early trading on Wednesday, Tesla stock experienced a loss of 2.8%. It would appear to be a response to the recent reductions in pricing. The Nasdaq Composite has experienced a loss of 0.6%.
Gross profit margins for the automotive industry are expected to be slightly north of 20% in the first quarter, according to projections made by industry analysts. This figure represents a decline from over 25% in the fourth quarter of 2022 and more than 30% in the first quarter of 2022.
George Gianarikas, an analyst at Canaccord, predicts that gross profit margins for the automobile industry will be 20.5% for the first quarter and 20.7% for the full year, despite the fact that all of the price cuts will result in earnings that are “nail bitter.” He has a Buy recommendation on Tesla stock and a price objective of $275.
Investors will place a high level of importance on margins higher than 20%, as will management commentary regarding margins for the remaining part of the year. During the conference call for the company’s fourth quarter in January, Chief Financial Officer Zachary Kirkhorn said that Tesla may be able to maintain automotive gross-profit margins above 20% in 2023. That was a projection for the entire year. He did not provide a quarterly breakdown of his guidance. At a bare minimum, investors would like to hear Kirkhorn restate his stance from January.
It’s possible that investors may have to wait until the conference call to acquire further information on this. The conference call is scheduled to get underway at 5:30 p.m. Eastern time.
During that call, investors will also be interested in hearing about order activity and demand after price reductions have been made to vehicles. During the call for the company’s fourth-quarter earnings, CEO Elon Musk stated that the company was receiving orders at a rate that was twice its manufacturing capacity. Another piece of information that investors are hoping to hear on Wednesday is that demand is still higher than supply.
The sting of diminished wages might be lessened by increased demand. Bloomberg states that since the third quarter of 2019, Tesla has not posted an adjusted earnings decline when compared to the same period the previous year. In comparison to the previous year’s same quarter, Tesla’s earnings per share were reported to be 6 cents rather than 13 cents.
The reductions in price that Tesla has implemented have caused ripples throughout the entire automotive sector. In the year 2023, it is anticipated that both General Motors (NYSE:GM) and Ford Motor (NYSE:F) would experience a decline in their annual earnings. However, the majority of Ford and GM’s revenue still comes from the sale of conventional pickup trucks and sport utility vehicles (SUVs). Another topic of conversation for investors, analysts, and Tesla management is how the company’s recent price cuts for its electric vehicles (EVs) would affect the companies in question.
Investors should prepare themselves for uncertainty regardless of what Tesla management says. The options markets are indicating that following earnings, shares will move around 8% in either direction. Over the course of the last four quarterly reports, the price of Tesla stock has fluctuated approximately 8% on average. During that time period, the price of the share increased three times and decreased once.
Following the release of the company’s financial results for the fourth quarter, share prices increased by 11% the following day. Since then, Tesla stock has increased by an additional 15%. As a result of the gains, Tesla stock was over 50% higher year to date going into trading on Wednesday. After falling by 65% in 2022, the share price has since recovered quite a little. Since the beginning of the year, the benchmark S&P 500 index and the Nasdaq composite have seen respective gains of around 8% and 16%.
Featured Image: Unsplash @ Tesla Fans Schweiz
