Focusing on Tesla’s Financial Health
As Tesla (NASDAQ:TSLA) nears its upcoming earnings report, a keen eye is set on the company’s financial performance, particularly with full-year estimates for the core auto business undergoing revisions. Investors are navigating through the waters of expectations set by AI advancements, Full Self-Driving (FSD) technology, the promising realm of robotaxis, energy storage, and the geopolitical backdrop.
The Fiscal Numbers Game
Analysts predict Tesla to unveil revenue figures amounting to $24.7 billion with an EPS of $0.62. This outlook stands against the backdrop of a year ago figures that displayed revenue figures of $24.9 billion and an EPS of $0.91 for the same quarter. Notably, Tesla has experienced successive misses on the EPS front over the last three quarters. Of particular interest is the company’s operating margin, which took a hit in Q1, dropping to 5.5% due partly to lower EV prices. Watchful eyes are also on Tesla’s anticipated positive free cash flow following an improved inventory position from the previous quarter.
Energy, FSD, and Robots Take Center Stage
The sluggish growth in Tesla’s automotive sector has heightened the importance of displaying promise in other domains. Of particular focus are the anticipated trajectories of the energy storage business, with a record deployment of 9.4 gigawatts per hour in the last quarter, marking its highest ever quarterly deployment.
Morgan Stanley now anticipates Tesla’s energy sector to hit 100GWh in storage deployments by 2028, three years ahead of previous projections. The firm signals an accelerating global demand for energy storage due to rising generative AI necessities. Tesla’s presence in this burgeoning market is expected to expand, with Morgan Stanley raising its valuation of Tesla Energy significantly. The energy segment boasts a higher margin profile compared to solar deployment or the auto business, making it an attractive venture.
Additionally, the foreseeable metrics regarding Full Self-Driving technology adoption, as well as insights on robotaxi and the Optimus business, are under scrutiny by analysts and investors. Notably, Tesla’s strategic shift towards emphasizing AV/AI businesses has drawn keen interest, with Barclays analyst Dan Levy urging clarity on Tesla’s transformative path beyond vehicle manufacturing growth.
Wildcards to Watch in the Earnings Call
Elon Musk is poised to provide updates on the potential rollout timeline for the robotaxi service and unveil details on a low-cost vehicle for the mass market. Questions also loom around Tesla’s embodied AI capabilities and the impending Master Plan 4, potentially rooted in the company’s commercial forays into AI, robotics, and hybrid compute.
Other pivotal themes that might emerge during the earnings call could revolve around the semiconductor industry, with the looming threat of disruptions amidst geopolitical tensions and the semiconductor supply chain. The interconnectedness of the U.S.-China relationship, coupled with potential trade wars in the chip industry, poses challenges that could impact Tesla and its kin in the EV sector.
Market Dynamics and Beyond
Post-earnings, the aftermath is set to influence related auto stocks such as Rivian Automotive, Lucid Group, and interestingly, Ford Motor, reflecting Tesla’s market sway. Nvidia, the Santa Clara-based chip giant, could also sneak into the limelight for its collaboration with Tesla and the pivotal role it plays in supporting the tech company’s AI endeavors.
