Investor's Corner
Tesla (TSLA) Q1 2023 earnings call preview: What Wall Street expects
Tesla (NASDAQ: TSLA) is expected to release its first-quarter earnings results this evening after markets close. Tesla’s Q1 2023 earnings report is among the most anticipated from a financial standpoint, as the automaker dropped prices on six separate occasions through the first three months of the year, leaving analysts and investors pondering the effect on automotive margins.
Tesla performed extremely well in terms of vehicle production and delivery figures for Q1, setting records in both categories as it continues to ramp production in Germany and Texas at its two newest Gigafactories.
Tesla Earnings has analysts setting their sights on one thing
Tesla delivered 422,875 vehicles in Q1, beating estimates from Wall Street that put projections at 420,000.
Wedbush analyst Dan Ives said in a note to investors earlier this week that the main focus of this earnings call will be margins. “That said, price cuts come at a price and this tug of war between volumes and margins is now the big debate on the Street heading into earnings and the rest of FY23,” Ives writes. “The bull/bear debate at the core is: When do the price cuts end for Tesla and what will margins look like on the other side of this cycle as we progress through 2023 in a choppy macro?”
Earnings
A survey of 26 analysts puts Tesla’s projected earnings per share at $0.85, Yahoo Finance says, ranging from $0.69 and $1.06. Tesla posted non-GAAP earnings per share of $1.19 in Q4 and $2.27 for Q1 2022.
The series of price cuts have affected Tesla’s numbers in this metric, and with so many drops being used to push prices lower, analysts and investors alike will be looking to see how the strategy will affect the company’s financials.
Revenue
22 analysts expect Tesla to report revenues of $23.21 billion, which would be a slight decrease from the $24.318 billion that the company reported in Q4 2022. Tesla posted total revenues of $18.756 billion during the same quarter last year, with a gross profit of just under $5.5 billion.
Other Points to Expect
The big thing to listen for is margins and whether Tesla’s automotive gross margin can remain above 20 percent. Ives wrote in his note to investors on Monday that cutting prices can lead to margin deterioration. Still, Wedbush believes Tesla’s automotive gross margins will remain above 20 percent, as it “remains the key threshold over the coming quarters.”
We can also expect some updates to Tesla’s product line, as questions submitted by investors on Say showed that many hope for new details on the Cybertruck.
Tesla still, as of now, plans to start production of the Cybertruck this Summer, with volume production beginning next year. However, there has been no update on pricing or available configurations as of yet, although some details about the vehicle were leaked at the company’s recent Investor Day.
Tesla will report earnings at 5:30 ET/4:30 CT this evening. For the first time, the company will stream its call on Twitter.
Disclosure: Joey Klender is a TSLA Shareholder.
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Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
Tesla is not sparing any expense in ensuring the Cybercab is safe
Tesla’s Elon Musk gives timeframe for FSD’s release in UAE
