....Tesla stock price has run ahead with hope of further news on Robotaxi.
Tesla is set to report its second-quarter earnings after the bell on Tuesday, even as investors expect Robotaxi update.
TakeAway Points:
Tesla’s Q2 earnings are expected to show 62 cents per share on $24.77 billion in revenue, amid declining automotive gross margins.
Investors are focused on updates regarding Tesla’s robotaxi and AI initiatives, with potential delays in the robotaxi unveiling.
Political controversies and market challenges, including declining California registrations, pose additional concerns for investors.
Tesla’s Earnings Expectations
Analysts are anticipating the company to report 62 cents per share in adjusted earnings on revenue of $24.77 billion for the period ending June 30, 2024, according to LSEG. This follows a vehicle deliveries report on July 2 that exceeded analysts’ expectations but still represented a decline from the previous year. The earnings call will provide investors with insights into CEO Elon Musk’s strategies to return to growth after Tesla reported its largest revenue decline since 2012 during the first quarter. Pressures
Tesla’s automotive gross margin is expected to hit its lowest point in over five years. According to a poll of 20 analysts by Visible Alpha, the automotive gross margin, excluding regulatory credits, is projected to have slipped to 16.27% in the April-June period. This is a decline from the 16.36% reported in the previous quarter and the 18.14% recorded in the same period last year.
The margin pressure is attributed to discounts to clear inventory, price cuts, and various incentives such as cheaper financing options aimed at boosting EV sales. These measures have squeezed Tesla’s profitability over the past two years. Additionally, sales have been impacted by customer fatigue with the company’s aging model lineup. AI and Robotaxi Measures
Investors are keenly focused on Tesla’s strategic pivot towards self-driving technology and artificial intelligence (AI) products. CEO Elon Musk is expected to discuss the company’s ambitious plans for robotaxis and AI ventures during the earnings call. Musk had announced plans to unveil Tesla’s robotaxi on August 8, but recently signaled a potential delay to October to incorporate design changes. This has heightened investor interest in understanding Tesla’s roadmap for self-driving technology and its potential to transform the company’s business model.
Paul Marino, Chief Revenue Officer of GraniteShares, commented, “AI and robotaxi is such a huge opportunity over the next two, three, five years. So if you’re a long-term believer, you’re going to take the margins like your medicine.” Despite the anticipated margin pressure, some analysts expect Tesla’s profitability to bottom out by the end of this year and begin to recover in 2025. Political and Market Challenges
Tesla’s recent political and polarizing statements have sparked concerns about the company’s brand, especially in liberal states such as California, which accounts for 10% of the company’s global deliveries. California Tesla registrations fell to 52,211 vehicles during the second quarter, according to data from the California New Car Dealers Association. Investors have also submitted questions via the Say Technologies platform about Tesla’s progress in developing humanoid robotics, the status of a new factory in Monterrey, Mexico, and the outlook for its rapidly growing battery energy storage business.
Musk’s recent endorsement of former President Donald Trump and his role as a Republican megadonor have also raised questions among shareholders. One investor asked, “Do you believe a Trump/Vance admin will support Tesla and EVs? How confident are you based on your conversations?” Another questioned, “How can Elon Musk endorse/fund a party that denies climate change, yet at the same time Tesla’s mission statement is derived directly to fight climate change?”
