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Tesla's Profit Predictions in Question

On October 18, 2023, Tesla unveiled its Q3 2023 earnings report. The report was published on the Investor Relations website, and a live webcast of the financial results was held at 4:30 p.m. CT on the same day. During the earnings call, Elon Musk expressed concerns about the high-interest rates environment and emphasised making Tesla cars more affordable, amidst other discussions. However, discrepancies between Wall Street expectations and Tesla's financial reality have drawn attention. In recent years, Tesla investors have faced issues such as missed delivery goals, capital raises, intense EV market competition, and legal challenges for Elon Musk —including a settlement with the SEC. Implicitly, Tesla's future success could depend on its capacity to retain its early lead in the U.S. electric vehicle market, sustain its remarkable growth, and diversify beyond its primary automotive sector.

Tesla's Stock Performance Analysis 

Tesla went public at $17 in 2010 and split its stock five-for-one in 2020 and three-for-one in 2022, making an IPO share worth 15 today. In 2020, Tesla surged 743%, became the S&P 500's top performer, and gained significant market capitalization despite modest revenue growth. It reached a high of $414.50 in November 2021 before a 65% drop in 2022. Currently, Tesla's stock price is down by over 9%, but traders and investors need to get a broader context of potential market movements that may impact individual stocks like Tesla. The E.S. futures chart enables traders to assess the performance of the S&P 500 index and serves as an acknowledged measure of the broader performance of the U.S. economy. Looking at tools like the ES futures chart can help traders get a sense of how the general market is performing before making any trading decisions. For instance, over the past decade, TSLA returned over 2,000%, but year-to-date, it's up 125% compared to the S&P 500's 12% total return, as shown on the ES futures chart. Traders may want to keep an eye on Tesla stocks as the company still has some interesting prospects, including a proposed new factory in Mexico and increasing consumer demand for electric vehicles. While they watch Tesla's evolution, they can also choose to secure a position in ES futures as a way of speculating whether the S&P 500 will go up or down, and possibly earn a profit if their speculations are right.

Tesla's Profit Predictions and Recent Delivery Miss 

Tesla's 2023 Q3 financial result fell short of expectations as it reported a significant drop in delivery from 466,140 in Q2 to 435,059 amidst Wall Street's estimate of 473,000 to 456,000. According to the company, the drop in production volume was due to production line upgrades. Tesla's earnings were predicted to be 73 cents per share this Quarter, but instead, it recorded adjusted earnings of 66 cents per share, with a reported revenue of $23.35 billion against the expected revenue of $24.1 billion. Since the second quarter of 2019, this is the first time Tesla has missed the expected target on both revenue and earnings. The total operating margin this quarter was 7.6%, which is significantly down compared to the 17.2% reported in Q3 of 2022. Tesla announced through X(Twitter) that the first deliveries of the Cybertruck will commence on November 30th at Giga, Texas and investors are hoping that this development, accompanied with the revamped Model 3 in China, could inspire a rebound in deliveries. However, Elon Musk has clearly cautioned that it might take 12-18 months for the Cybertruck to contribute positively to cash flow. Conclusively, the company still expects to remain ahead of the long-term 50% CAGR with around 1.8 million vehicles for the year. However, most stock market analysts believe they'll need to work extra hard in Q4 to achieve that target.

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