Electric vehicle (EV) king Tesla (TSLA), perhaps the most significant bull/bear battleground stock on Wall Street, will report earnings tonight after the market close. Tesla’s stock performance is mixed, depending on who you ask and their investing timeframe. For those with a long-time horizon, the performance is undeniable. Tesla stock is up a scorching 19,500% since it became public in mid-2010. However, times have been more challenging since 2021, and the stock, which currently trades at around $250, is well off its split-adjusted all-time high of $414.50. Nevertheless, the stock is showing signs of life again, gaining nearly 40% over the past month and ripping through its 200-day moving average – a critical trend filter.
Margins: Stabilization or Continued Downtrend?
Sky high interest rates have been a significant headwind for Tesla. To clear inventory, CEO Elon Musk and the Tesla team have been forced to offer steep price cuts and incentives to spur on sales. Investors should pay close attention to what the company says about its pricing moving forward. The possibility of lower interest rates on the horizon could provide a much-needed boost to Tesla.
Robotaxi Update
Elon Musk has articulated his commitment to making Tesla a leader in the autonomous robotaxi market. While the delay in unveiling the robotaxi caused a temporary market dip, astute observers recognize that ambitious timelines are inherent in Musk’s leadership style.
Wall Street Expectations & Stock Reaction
Tesla has missed Zacks Consensus Estimates for three consecutive quarters. However, the stock rallied last quarter post-earnings miss, indicating potential optimism among investors. Monitoring the response to this quarter’s results will offer valuable insights.
Cybertruck
Tesla’s futuristic Cybertruck was introduced in late 2023. The question arises whether this unconventional SUV will resonate with consumers or meet a lukewarm response.
Asia Competition
With the rise of formidable Chinese competitors like Nio and BYD Co., Tesla faces increased competition. Investors should keenly observe Tesla’s positioning in this challenging market and any remarks on the competitive landscape from hybrid vehicle manufacturers.
Bottom Line
Anticipated lower interest rates could serve as a favorable catalyst for Tesla’s future performance. However, scrutinizing Tesla’s earnings report is crucial to validate a potential turnaround in the company’s fortunes.
