Tesla earnings preview: All eyes on those +20% automotive margins
Spencer Platt
The electric vehicle sector will be on high notice on April 19 with Tesla (NASDAQ:TSLA) due to report Q1 earnings. Consensus marks are for revenue of $23.4B to be reported and EPS of $0.85. Earlier in the month, Tesla (TSLA) reported that it delivered 422,875 vehicles in Q1. The tally included 412,180 Model 3/Model Y vehicles and 10,695 Model S/Model X vehicles. The Austin-based auto company produced 440,808 vehicles during the quarter. Both the production and delivery numbers were subject to an operating lease accounting shift of 5%. Tesla (TSLA) has a production target of 1.8M units in 2023 and multi-year target to grow deliveries 50% annually.
The key question for investors may be the update on margin expectations amid the electric vehicle pricing war. Morgan Stanley analyst Adam Jonas thinks defending the 20% clean auto gross margin may be tough for the automaker due to weakening EV demand relative to EV supply. "Our working assumption is that Tesla will continue its price cut campaign to ensure their vehicles come in cheaper than their competitors who do qualify for the IRA benefits," he noted. The issue may be that Tesla guided on a prior earnings call that it does not expect automotive gross margin to go below 20% in any quarter this year. However, Barclays analyst Dan Levy thinks if Tesla (TSLA) shares could rally if the Austin-based company posts a solid margin beat or provides commentary soothing concerns on demand and pricing.
On Seeking Alpha, analyst Doron Levin has a breakdown on Tesla's vague details on a $25K vehicle. There is also a detailed earnings previews from Investing Groups Leader Beth Kindig to digest with both technical and fundamental analysis.
Shares of Tesla (TSLA) head into earnings day up 70% on a year-to-date basis, but still stand almost 50% below their all-time high.
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