Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla, Inc.’s (NASDAQ:TSLA) fundamentals have been on the wane for an extended period, with the financial results testifying to the fact. A fund manager on Wednesday noted that the stock has been down in earnings reaction in each of the past four quarters.
What Happened: Tesla’s shares have reacted negatively to earnings of each of the four past quarters, beginning in the first quarter of 2023.
| Quarter | Earnings Date | Revenue Performance | EPS Performance | Stock Reaction (session following the report) | What weighed down |
| Q1’23 | April 19, 2023 | Beat | In-line | -9.75% | y-o-y revenue & EPS declines, price cuts |
| Q2’23 | July 19, 2023 | Beat | Beat | -9.74% | falling margins, Cybertruck launch uncertainty |
| Q3’23 | Oct. 18, 2023 | Miss | Miss | -9.30% | double miss, margin erosion |
| Q4’23 | Jan. 24, 2024 | Miss | Miss | -12.12% | double miss, margin erosion |
Fund manager Gary Black, who runs Future Fund observed the post-earnings plunge in a post on X.
Turnaround In Offing? Given the company’s fundamentals have not improved since then and have only deteriorated, the stock could likely swoon yet again post earnings. The only consolation is that much of the negativity is already priced into the stock. Following Tesla’s first quarter d delivery decline, the first since the COVID-19-hit 2020-second quarter, analysts have scaled back their expectations
Most have also taken down their price targets. On Wednesday, Barclays analyst Dan Levy reduced the price target for Tesla stock from $225 to $180, while maintaining an Equal Weight rating. The analyst said he expected a first-quarter miss due to soft margins. He calls for gross margins of 14.6% for the first quarter, citing weaker volume.
The second quarter could also have a downside if the company has to cut prices further amid the inventory buildup, the analyst said. He sees the first-quarter call to be a negative catalyst for the stock. Model 2 plans will likely get the most attention but the management will unlikely give a satisfactory response, he added.
Black has opted to remain cautious with his prediction. He called upon the Tesla management to focus on explaining why fundaments will improve and stay away from “grandiose promises” about robotaxi.
Investors may want to hear that the 2024 volume growth won’t be negative as many analysts have been predicting and that the auto gross margin likely bottomed in the first quarter, he said. The fund manager also said the company should delve into the timing of the $25K compact car, as he sees it as one that would bridge the gap between the “two growth waves” to justify Tesla’s P/E multiple of 60.
Tesla is scheduled to report its first-quarter results on Tuesday. Analysts, on average, expect the company to report earnings per share of 52 cents on revenue of $22.49 billion, according to Benzinga Pro data. This compares to the year-ago earnings of 85 cents per share and revenue of $23.33 billion.
Price Action: Tesla ended Wednesday down for a fourth straight session, losing 1.06% to $155.45, according to Benzinga Pro data.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
Read Next: Tesla Analyst Says Expect ‘Fireworks’ Into Shareholder Meeting After EV Giant’s Proxy Filing: ‘Clock Has Struck Midnight For Musk’
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Latest Ratings for TSLA
| Feb 2022 | Daiwa Capital | Upgrades | Neutral | Outperform |
| Feb 2022 | Piper Sandler | Maintains | Overweight | |
| Jan 2022 | Credit Suisse | Upgrades | Neutral | Outperform |
View the Latest Analyst Ratings
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