Tesla's Q4 earnings report will be a big one, but here's what to expect
Wednesday s Tesla Q 4 earnings report after the bell will be a big one, especially considering Tesla shares are hovering at 2 year lows.
The revenue figure would represent another record high for Tesla, up over $2 billion from Q 3 and nearly $7 billion from a year ago.
On the profitability end, Tesla is expected to report adjusted net income of $3.98 billion, around $300 million more than Q 3, and over $1.3 billion more than a year ago.
While Tesla instituted price cuts in the U.S. and some European markets for the second time, those cuts did not happen until Q 1 of this year, so they won't be seen in Q 4 results. In the last quarter, the gross margin came in at 25.1%, with the automotive gross margin hitting 27.9%. The EBIT adjusted margin of GM stood at 9.4% last quarter. The big question mark going into earnings is how much will recent price reductions affect gross margins, according to Canaccord Genuity analyst George Gianarikas, an interview with Yahoo Finance. While Gianarikas sees margins coming down this year, he believes that Tesla's gross margins will keep margins healthy over the years to come due to sales of FSD full-self driving software and commodities prices.
According to the earnings call, investors and analysts will focus on the demand story for Tesla, and whether the steep price cuts across the board are boosting deliveries in Q1.
We don't think most investors appreciate the extent to which lower pricing could support Tesla's market share, Piper Sandler analyst Alexander Potter wrote a note to clients late last week. This is especially true in the United States where lower prices, combined with a $7,500 tax credit, could unlock 300 K units of incremental demand if not twice Potter has an overweight rating on the stock, and $300 price target.
Tesla's long-term delivery target of 50% CAGR compound annual growth rate has remained in place despite deliveries missing the mark in recent quarters. According to analysts, Dan Ives of Wedbush have called for CEO Elon Musk and Tesla s management to bring down that target in line with recent results. It is possible that Tesla will keep its delivery growth target intact, with recent price cuts boosting deliveries, factory ramp ups ongoing at Giga Berlin and Giga Austin.
Investors and analysts will be waiting for any incremental data points on the Cybertruck release later this year, as well as the latest on full self-driving technology and federal investigation into its safety. Pras Subramanian is a reporter for Yahoo Finance.