Tesla (TSLA) will report Q1 earnings after the bell on Tuesday, giving a much-needed update on the EV maker’s current and future prospects as investor sentiment slides.
Tesla’s Q1 has been nothing short of a rollercoaster ride. Shares were hit hard after the company reported Q4 results that disappointed, issued weak and non-specific 2024 delivery guidance, missed on Q1 deliveries, and did not refute reports of the demise of a sub-$30K volume EV. Tesla stock is down a whopping 43% year to date and 19% during its current seven-day losing skid.
For the quarter, Tesla is expected to report adjusted earnings per share of $0.52 on top-line revenue of $22.31 billion, per Bloomberg consensus estimates. That would be its first revenue decline in four years.
On the profitability front, Tesla is expected to show $1.49 billion in operating profit, a 40% slide from a year ago. In terms of non-GAAP metrics, the Street is expecting $1.79 billion in adjusted net income, and EBITDA of $3.32 billion.
The revenue drop and profitability slide follow a weaker-than-expected quarter of sales for Tesla. In Q1, Tesla reported 386,810 global deliveries, well below estimates of 449,080, and produced 433,371 vehicles, also below estimates of 452,976.
The difference of around 46,500 vehicles produced versus sold led to concerns of demand waning globally for Tesla vehicles, which in turn has led to round after round of price cuts. Even on Monday, Tesla cut prices for vehicles in the US and China, leading to weakness in the stock during the day.
Investors will also be watching for Tesla’s future product roadmap. The long-awaited next-gen platform which would underpin a sub-$30,000 mainstream EV (dubbed the Model 2) was seen as a huge volume play for Tesla, one that would use a revolutionary “unboxed” production line to make these vehicles cheaply.
After Reuters reported that Tesla was canceling the cheaper EV, Musk responded on X, formerly Twitter, that Reuters was “lying (again)” before returning to the platform later to announce the unveiling of the robotaxi, generally understood to have no steering wheel or pedals. It’s still an open question whether Tesla will eventually unveil a low-cost EV.
Pivoting to robotaxis as opposed to a cheaper EV is fraught with risks, according to analysts.
Tesla has given up a “key reason” why many own the stock: The Model 2 as a volume play would “reaccelerate volume, margins, and FCF [free cash flow],” Deutsche Bank’s Emmanuel Rosner wrote in a note earlier this month. It would also mean the bull thesis is based on Tesla cracking the code for self-driving, which will require navigating a number of regulatory hurdles and acquiring enough data to train the software.
Analysts like Bank of America’s John Murphy believe the Model 2 isn’t dead yet.
“During 4Q24 earnings call, management mentioned that the vehicle was under development and an optimistic SOP [start of production] would be for [the second half of 2025], but CEO Elon Musk acknowledged that due to the introduction of new technology the production process may be slower than expected,” Murphy wrote in a note to clients on Monday. “In our view, Tesla is still developing the Model 2 given that it is a fundamental piece of company’s growth story.”
Finally, Tesla may address (and will likely be asked about on the post-earnings conference call) other pieces of major business, such as the status of Tesla’s recently announced staff cuts of over 10% and management’s stance on new shareholder votes coming up in June. The votes deal with a change to Tesla’s state of incorporation and whether to approve Musk’s controversial pay package from 2018 that was voided by a Delaware court.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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