{"id":26861,"date":"2023-10-15T01:10:20","date_gmt":"2023-10-15T01:10:20","guid":{"rendered":"https:\/\/isafespend.com\/investing\/tesla-is-reporting-earnings-next-week-and-its-all-about-margins\/"},"modified":"2023-10-15T01:10:21","modified_gmt":"2023-10-15T01:10:21","slug":"tesla-is-reporting-earnings-next-week-and-its-all-about-margins","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=26861","title":{"rendered":"Tesla is reporting earnings next week, and it\u2019s \u2018all about margins\u2019"},"content":{"rendered":"
\n

Tesla Inc. is slated to report third-quarter earnings on Wednesday amid renewed concerns about the EV maker\u2019s margins and demand after a fresh round of price cuts. <\/p>\n

Sentiment toward Tesla
\n TSLA,
\n -2.99%<\/bg-quote>
\n earnings for the remainder of the year \u201cskews cautious,\u201d and there\u2019s risk earnings could be revised lower, Morgan Stanley analyst Adam Jonas said in a note Thursday. <\/p>\n

\n

Moreover, many investors \u201care wondering if Tesla can grow earnings at all\u201d in the next year, with the year ahead seen as \u201cvolatile,\u201d said Jonas, who added he recently hosted a group of Tesla investors to discuss their expectations for the company. <\/p>\n

There was also \u201cvery little enthusiasm\u201d about Tesla\u2019s next model, the Cybertruck, among the investors, Jonas said. <\/p>\n

\u201cTeething issues\u201d with the unconventionally styled electric pickup truck are \u201cseen as perpetuating Tesla\u2019s relatively stale model lineup,\u201d with its only recourse being price cuts. <\/p>\n

Analysts polled by FactSet expect Tesla to report adjusted earnings of 73 cents a share on sales of $24.3 billion. That would compare with adjusted earnings of $1.05 a share on sales of $21.5 billion, which Tesla reported in the third quarter of 2022.<\/p>\n

The price cuts, the latest of which were announced last week, rehashed investors\u2019 worry about the company\u2019s margins. <\/p>\n

Tesla\u2019s third-quarter earnings report is \u201call about margins,\u201d Gene Munster of Deepwater Asset Management said in a recent note. <\/p>\n

See also:<\/strong> Rivian\u2019s stock is a buy for UBS as \u2018road ahead looks brighter\u2019 for EV maker<\/p>\n

Operational margins are at the heart of a key investment debate surrounding Tesla, and whether it is a car company or a tech company, Munster said. <\/p>\n

Even more importantly, however, Tesla\u2019s gross margins on vehicles have been falling for the past three quarters, to 18.1% in the June quarter from 24.3% in the December quarter, which is tied to the price cuts. <\/p>\n

Gross margins are likely to drop again in the third quarter, but are likely to recover in the fourth quarter, Munster said.<\/p>\n

Joseph Spak at UBS recently reduced his profit expectations for Tesla for the next couple of years, seeing \u201cdownside risk\u201d to the estimates. \u201cWe forecast \u2026 a moderate EPS miss at [Tesla],\u201d he said <\/p>\n

Tesla earlier this month reported third-quarter deliveries, its proxy for sales, that were below expectations. <\/p>\n

Given the \u201cmore limited [third-quarter] de-stocking, recent U.S. price cuts and the current valuation,\u201d reaction to Tesla\u2019s third-quarter earnings are likely to be similar to \u201cneutral to slightly negative\u201d reaction to the company\u2019s second-quarter results, Citi analyst Itay Michaeli said. <\/p>\n

Tesla shares have gained 114% so far this year, compared with gains of around 14% for the S&P 500 index
\n SPX.<\/span>\n <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Tesla Inc. is slated to report third-quarter earnings on Wednesday amid renewed concerns about the EV maker\u2019s margins and demand after a fresh round of price cuts. Sentiment toward Tesla TSLA, -2.99% earnings for the remainder of the year \u201cskews cautious,\u201d and there\u2019s risk earnings could be revised lower, Morgan Stanley analyst Adam Jonas said<\/p>\n","protected":false},"author":1,"featured_media":26862,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[],"class_list":{"0":"post-26861","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"\nTesla is reporting earnings next week, and it\u2019s \u2018all about margins\u2019 | iSafeSpend<\/title>\n<meta name=\"description\" content=\"Tesla Inc. is slated to report third-quarter earnings on Wednesday amid renewed concerns about the EV maker\u2019s margins and demand after a fresh round of\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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