Here we go again. The Q3 earnings season is about to commence, and one of Wall Street’s big hitters is just about ready to deliver its latest financial statement. After the bell rings to bring today’s proceedings to a close, Tesla (NASDAQ:TSLA) will be delivering its Q3 report.
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We already know how many vehicles the EV leader delivered during the quarter, as it announced its Q3 haul at the start of the month, and the numbers were not good, to say the least. The company announced total deliveries of 435,100 vs. the Street’s expectation of 455,000.
The lackluster performance is acknowledged by Wedbush’s Dan Ives, a 5-star analyst rated in the top 2% of Wall Street’s stock pros. However, he expects Tesla to pick up the slack as the year progresses and into the next one.
“Tesla’s 3Q delivery numbers came in below the Street’s targets with the longer than expected downtimes of factories in Shanghai and Austin causing likely ~20k units to shift into 4Q based on our estimates,” says Ives. “Even when factoring in the shutdowns with no rose colored glasses Tesla clearly missed Street estimates this quarter with bulls left disappointed, although we see better days ahead for 4Q and 2024.”
Wall Street is looking for Tesla to deliver Q3 revenue of $24 billion and EPS of $0.73 with automotive gross margins (ex credits) expected to hit the ~17% range.
With most of the price cuts now done and dusted and the company having concluded the factory shutdowns/upgrades, Ives believes Q3 should mark a trough for gross margins, and he expects them to expand from these levels.
As for what to look out for on the earnings call, Ives thinks one of the main subjects of discussion will revolve around the updates to the Model 3 and the general patterns of demand that Tesla is seeing worldwide. Ives is rather confident here. “While the macro is clearly not roses and rainbows we believe Tesla’s demand story has stabilized at current price levels with a focus on a strong 4Q ahead,” he says.
Tesla still expects to reach 1.8 million deliveries this year, while the Model 3 refresh and production of the Cybertruck, in addition to margins bottoming out and bouncing higher, represent “clear tailwinds into the next year,” according to the top analyst.
“This is an important conference call for Musk and the Tesla team to communicate the pricing/margin strategy and demand outlook into 4Q and beyond at this crucial time in the EV market share battle globally,” Ives summed up.
All told, Ives reiterates an Outperform (i.e., Buy) rating on Tesla shares, along with a $350 price target, suggesting shares will climb 43% higher in the year ahead. (To watch Ives’ track record, click here)
Tesla usually elicits a wide spectrum of opinions amongst analysts and that is the case right now too. Based on a mix of 12 Buys, 14 Holds and 4 Sells, the stock claims a Moderate Buy consensus rating. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
