Tesla, Inc. (NASDAQ:TSLA) is set to release its fourth-quarter results after Wednesday’s market close, and despite an anticipated modest revenue growth, a decline in profit is widely expected. As the stock has struggled since the second half of 2023, analysts suggest that Tesla faces a challenging task.
What Happened: Analysts, on average, expect Tesla to report adjusted earnings per share of 74 cents and revenue of $25.58 billion, according to Benzinga Pro data. This compares to the year-ago earnings and revenue of $1.19 and $24.32 billion, respectively.
Fund Manager Gary Black shared Tesla’s company-compiled consensus estimates, which indicate expectations of $25.72 billion in revenue and 73 cents in adjusted earnings per share. Gross and operating margin estimates of analysts averaged 17.8% and 8.3%, respectively.
“No one cares about $TSLA 4Q Adj EPS,” said Black. The numbers that matter are the fourth-quarter auto gross margins, excluding regulatory credits, and the 2024 deliveries guidance, the fund manager said, adding that the consensus expectations for these two metrics are at 16.7% and 2.187 million.
Black models fourth-quarter core auto gross margin of 16.1% and adjusted earnings per share of 73 cents. Despite higher fourth-quarter volume relative to the third quarter, the core auto gross margin may have contracted due to higher U.S. inventory discounts to clear legacy Model 3 EVs ahead of the refreshed model launch and higher Model Y inventory discounts in China and Europe, the fund manager said.
“The key investment controversy is whether auto gross margins have bottomed,” Black said. “If yes, $TSLA rises. If not, $TSLA falls (assuming mgmt’s delivery guide hits consensus).”
See Also: Best Electric Vehicle Stocks
On the conference call, investors will likely look for signs that auto gross margins have bottomed, the timing of the $25K vehicle, the speed of the Cybertruck ramp, and Optimus timing. A Reuters report said Tesla is considering commencing production of a mass-market vehicle, codenamed “Redwood,” in mid-2025.
For 2024, Black estimates deliveries of 2,200 units, a core auto gross margin of 17%, and adjusted earnings per share of $3.75. This compares to the consensus estimates of 2.187 million units, 17.8%, and $3.80, respectively.
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