Tesla's Q4 Earnings Preview: Slumping Sales Don't Hinder Soaring Share Price

Tesla plans to release its Q4 earnings report after the market close on January 29th, Eastern Time. Against the backdrop of intensifying global competition and Trump's election as president, stock price volatility has increased, and the market's attention to whether the performance meets expectations has grown significantly. Meanwhile, by 2025, current consensus suggests that Tesla's profit will return to YoY growth, following an expected dip in 2024.

Consensus Estimates

– Tesla's adjusted earnings per share are expected to be $0.65, representing a 71.36% decrease from last year.

– The expected revenue is $27.07 billion, showing a 7.57% increase compared to the same period last year.

Trump's Election as President Sends Tesla's Stock Price Soaring

Tesla's stock price increased by approximately 60% in 2024. However, nearly all of this increase occurred in the fourth quarter, especially after Trump won the presidential election. Investors are highly anticipating preferential policies for Tesla under the Trump administration. These may include the possible withdrawal of the Inflation Reduction Act and the potential relaxation of regulations on autonomous vehicles.

Analysts generally believe that Trump's election as president is unfavorable to the electric vehicle industry as a whole, but Tesla is an exception. Elon Musk campaigned for Trump throughout the election cycle and attended Trump's inauguration ceremony, thus establishing a good relationship with Trump. Additionally, Musk will lead the "Department of Government Efficiency" (DOGE), collaborating with the White House and the Office of Management and Budget, which may potentially bring certain benefits to Tesla's business operations, although the exact implications remain to be seen.

Focus on Automobile Sales Revenue

Tesla announced its 2024 vehicle delivery data on January 2nd. Globally, Tesla produced approximately 1.773 million pure electric vehicles and delivered about 1.7892 million vehicles. This is lower than the 1.8086 million vehicles delivered in 2023 and also lower than the 1.8 million vehicles generally expected by analysts. This marks the first annual sales decline for Tesla since its listing in 2011.

Moreover, we need to pay close attention to the Average Selling Price (ASP) and the impact of price cuts and hikes on it. The latest news indicates that the price of Tesla's Model 3 in Canada will increase by up to 9,000 Canadian dollars. Such price adjustments can have a direct impact on the company's revenue and profit margins, which are crucial factors in the upcoming financial report.

Cathie Wood's Bullish Stance on Tesla's Autonomous Taxis

Although Tesla's car sales have declined, investors who have bought Tesla's shares are placing more hope on the success of Robotaxi. At the "We Robot" event on October 10th, Cybercab and Robovan were showcased. However, the market felt that insufficient details had been provided. The day after the autonomous taxi-related event, Tesla's stock price dropped significantly, sending a sell signal to investors.

Wood has long been very bullish on Tesla's autonomous driving and autonomous taxi goals. It is predicted that by 2029, approximately 90% of Tesla's enterprise value and earnings will come from the autonomous taxi business. This long-term growth prospect is an important factor for investors when evaluating Tesla's future financial performance.

Tesla: FSD v13 and IRA Tax Credit Updates

After a limited release of FSD v13 around Thanksgiving, Tesla influencers were excited. However, a wider rollout showed no major self - driving progress. Musk anticipates true self - driving by mid - 2025. The development of FSD is closely related to Tesla's future competitiveness and profit - making potential.

Also, reports of the possible end of the IRA's $7,500 EV tax credit affected TSLA shares. While Musk seems to support cutting it, its removal could have a significant impact on Tesla's auto business, especially in terms of sales volume and market share, which will be reflected in the financial report.

Analyst's View

Adam Jonas, a renowned automotive analyst at Morgan Stanley and a steadfast Tesla (TSLA) bull, has recently made a significant move in the financial realm. He raised the price target for Tesla's stock from $400 to $430 while maintaining an overweight rating on the stock, with Tesla still firmly remaining Morgan Stanley's "top pick." His perspective is grounded in an in - depth analysis of Tesla's fundamentals, growth prospects, and market position, offering investors crucial insights.

Notably, Jonas further elaborated on his observations in a recent report. He highlighted a remarkable shift in investors' mindsets. As investors increasingly show enthusiasm for Tesla's diverse business pursuits, including energy storage solutions, autonomous driving technologies, and artificial intelligence initiatives, traditional metrics like Tesla's automotive gross margins and vehicle delivery growth seem to have taken a backseat. This evolving focus among investors signals a new era in evaluating Tesla's long-term potential.

What Insights Do Options Data Provide?

Tesla has experienced significant stock price fluctuations on several recent earnings release days. The options pricing market indicates that the expected move after this Q4 earnings report could be ±12.4%, compared to an actual average move of 14.6% over the previous four quarters.

In terms of overall volatility, Tesla's implied volatility (IV) is 76.1%, which is in the 97% percentile rank, higher than the historical volatility of 67.6%. These option data can help investors better understand the market's expectations and risk assessment of Tesla's stock price, providing valuable information for investment decisions.

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