Tesla’s (NASDAQ:TSLA) Robotaxi event was a big letdown for investors but the EV tech giant will get a chance to turn sentiment positive again when it reports Q3 earnings tomorrow after the close.
According to Wedbush analyst Daniel Ives, Tesla needs to demonstrate some progress on the margin front to regain investor confidence. Ives thinks the Street is looking for a “leveling off” for Auto GMs (ex credits) and hoping for a trajectory that will show margins moving towards the ~20% threshold level for 2025.
“We need to start seeing this key metric head into the high teens for 3Q/4Q to give the Street comfort much of the price cuts are in the rear-view mirror showing better margin days are ahead for 2025,” the analyst went on to say.
Looking ahead, in the key region of China, thanks to favorable leasing and financing options and pent-up demand, Ives expects strong growth to continue in Q4, building on a record few months toward the end of Q3. While EU subsidies and macro pressures mean Europe will continue to be a “slight overhang,” this should be balanced by stable U.S. demand and improving interest in other regions. Nevertheless, China is set to be the standout this quarter.
Investors obviously left the Robotaxi Day wanting more details about Tesla’s overall autonomous and AI strategy and Ives expects Elon Musk will provide more clarity on the timing and specifics of the FSD and Cybercab plans during the conference call. Potentially there could also be an update regarding the timing of the anticipated sub-$30,000 vehicle, which Ives thinks could launch in mid-2025.
“Overall,” the analyst summed up, “we expect generally in-line 3Q headline numbers with some slight upside likely on the margins front showing a bottoming on this key metric.”
Ives remains one of the Street’s TSLA bulls, giving the shares an Outperform (i.e., Buy) rating along with a $300 price target, implying gains of ~38% are in the cards for the next year. (To watch Ives’ track record, click here)
Ives isn’t the only Tesla optimist – 10 other analysts also rate Tesla a Buy. However, they’re up against 16 Hold ratings and 8 Sells, resulting in a consensus rating of Hold. The average price target of $207.83 suggests the stock could fall by ~5% from current levels. (See Tesla stock forecast
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.