Tesla is gearing up to unveil its third-quarter earnings for 2023 on October 26, and the stakes couldn’t be higher. With the stock rallying over 100% year-to-date, investors are on the edge of their seats. But can Tesla deliver, especially in the face of rising raw material costs and supply chain hiccups?
What to Expect from Tesla’s Earnings Report
Wall Street is eyeing an earnings per share (EPS) of $0.73 on a revenue forecast of $24.25 billion for the third quarter. If met, this would signify a 13% increase in earnings and a 27% surge in revenue year-over-year. However, it’s worth noting that this would also be Tesla’s lowest EPS in two years.
Gross Margin Under the Microscope
One key metric that has everyone talking is Tesla’s gross margin. With the cost of raw materials like lithium and nickel on the rise, the company’s gross margin has been squeezed in recent quarters. Analysts are projecting a gross margin of 17.5%, a dip from 19% in Q2.
Vehicle Deliveries: The Supply Chain Conundrum
Tesla managed to deliver 435,000 vehicles in Q2, and the expectation for Q3 is around 445,000. Yet, some market watchers are skeptical, citing supply chain disruptions as a potential roadblock.
The Stock’s Volatile Nature
Tesla’s stock is nothing if not volatile. Even minor news can trigger significant price swings. So, whether the stock will soar or plummet post-earnings is anyone’s guess and largely hinges on the earnings report’s details.
Expert Opinions
The analyst community is split. Dan Ives from Wedbush Securities is bullish, predicting that Tesla will outperform both earnings and revenue expectations. He even sees the stock hitting $400 within a year. On the flip side, Colin Langan at Wells Fargo advises caution, citing rising costs and supply chain issues as significant headwinds.
Key Facts to Consider
- Tesla’s third-quarter profit estimates have plunged by nearly 50% this year due to aggressive price cuts.
- Wall Street’s EPS expectation of 73 cents would be the lowest for Tesla in two years.
- Despite the anticipated EPS drop, a 13% increase in revenue is projected.
- Full-year adjusted EPS is expected to be $3.32, down from $4.07 in 2022.
- Tesla stock has appreciated 24% over the past year but dropped more than 4% in after-hours trading post-Q2 earnings.
Final Thoughts
As Tesla prepares to release one of the season’s most anticipated earnings reports, investors should brace for a rollercoaster ride. Whether Tesla stock will soar or plummet is up in the air, but one thing is certain: all eyes will be on the electric car giant come October 26.
