Tesla is due to report earnings after the bell Tuesday, with Wall Street looking for any sign of a reprieve from this year’s struggles. Shares are down more than 40% in 2024 and reached their lowest level since January 2023 on Monday amid concerns over demand, price cuts, a Cybertruck recall and heightening demand from Chinese competitors. TSLA YTD mountain Tesla shares in 2024 Against this backdrop, analysts are looking to see if Tesla can convince Wall Street of its growth potential ahead. Here’s the company’s setup heading into the report, what analysts expect and which updates analysts and investors are going to focus on for Tesla. Deliveries decline Tesla reported earlier in April that deliveries fell by 8.5% year over year in the first quarter. This was the first decline since 2020. Vehicle production also fell 1.7% from a year earlier. Management cited supply disruptions due to Houthi militia attacks on the Red Sea and factory disruptions. Deliveries are Tesla’s closest equivalent to reported sales but are not defined exactly in its shareholder communications. Outside of top and bottom line metrics, analysts look most toward deliveries and production numbers to gauge the demand and supply outlook for Tesla. RBC analyst Tom Narayan said the below-consensus deliveries results reflect “a perfect storm of one-timers complicating the overall demand story.” Big earnings drop expected For the first quarter, analysts polled by LSEG expect Tesla to report earnings of 51 cents per share, which represents a 39.8% year over year decline in earnings. Revenue is estimated to come in at $22.151 billion, or 5.1% lower than the same quarter last year. Several Wall Street firms lowered their price targets in advance of Tuesday’s announcement, with many forecasting that the company will lower its deliveries outlook for the rest of the year. Citi analyst Itay Michaeli reiterated his neutral rating and reduced his price target to $180 from $196 per share, suggesting 26.7% upside from Monday’s close. Wells Fargo’s Colin Langan maintained his underweight rating and cut his price target to $120 a share, citing poor fundamentals. He is also forecasting negative growth. Deutsche Bank’s Emmanuel Rosner downgraded the stock to hold from buy and slashed his price target to $123 a share. Rosner had been a longtime Tesla bull , rating it as a buy for two years. To be sure, some analysts are remaining more optimistic. Morgan Stanley’s Adam Jonas reiterated his overweight rating and $310 price target. Despite the challenging environment for the EV market, Jonas believes “Tesla won’t let a good ‘EV recession’ go to waste.” Watch out for Model 2, robotaxi updates Analysts are interested in what CEO Elon Musk will say about Tesla’s demand outlook and growth initiatives. In particular, updates on the rollouts of the Model 2 and robotaxi will be closely watched. Reuters reported earlier in April that Tesla was scrapping plans for its lower-priced, entry-level Model 2. Although Musk rebuked the report, which stated the company was abandoning its Model 2, there are still no updates on the project, per Bank of America’s John Murphy. “In our view, Tesla is still developing the Model 2 given that it is a fundamental piece of company’s growth story. However, looking at Tesla’s past SOP delays, we expect the Model 2 rollout to be much slower than management forecast and more of a 2026 event,” said Murphy. Deutsche Bank’s Rosner expressed concern that pushing out the Model 2 release date would pressure shares further. “Pushing out Model 2 will create significant earnings and FCF pressure on 2026+ estimates, and make the future of the company tied to Tesla cracking the code on full driverless autonomy, which represents a significant technological, regulatory and operational challenge,” Rosner said in a note. “We view Tesla’s shift as thesis-changing, and worry the stock will need to undergo a potentially painful transition in ownership base, with investors previously focused on Tesla’s EV volume and cost advantage potentially throwing in the towel, and eventually replaced by AI/tech investors with considerably longer time horizons.” Encouraging updates on the Model 2 would be a promising opportunity to maximize scale, according to Barclays’ Levy. To be sure, he noted that a more likely scenario is that Model 2 developments are on the sidelines, with greater emphasis put on the Robotaxi and Full Self-driving (FSD) technology). “Yet for now we believe this strategy pivot is a clear net negative for the Tesla investment thesis, as it casts significant uncertainty on the path ahead for Tesla, making success of the stock dependent on bets with seemingly binary outcomes,” said Levy. “Indeed, we are hard pressed to think of any other precedent of a company of Tesla’s size basing its path of success on such binary bets.”
