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The leading electric vehicle (EV) manufacturer prepares to disclose its second-quarter financial results on Wednesday, July 19, after the market closes. Investors have received preliminary information regarding earnings, with the company reporting production figures of 479,700 vehicles and deliveries totalling 466,140 vehicles during the quarter. The lion’s share of these sales was from the Model 3 sedan and Model Y crossover, the company’s two mainstream vehicles. This surpassed the expectations of Wall Street analysts, who had projected 445,924 deliveries, resulting in an approximately 7.5% beat by Tesla.
But while Tesla was able to sell a record number of vehicles worldwide in the second quarter, the company also adopted an aggressive pricing strategy that is expected to affect some of the company’s margins. Thus, while Tesla did sell more vehicles than ever before in Q2, its profit margin per vehicle sold likely declined in the quarter.
Over the weekend, Tesla announced the completion of its initial Cybertruck production at the Giga Texas facility. Mass production of this electric vehicle is anticipated to commence either towards the end of 2023 or at the beginning of 2024. However, the pricing range for the Cybertruck remains undisclosed. In 2019, the company had provided an estimated starting price between $40,000 and $70,000. It is important to note that this pricing range is subject to change due to various factors, including the upward trend in battery material costs.
Let’s examine three key aspects investors should monitor closely during the upcoming earnings report.
Revenue: Analysts have projected revenue to reach $24.76 billion, indicating a year-over-year growth of 46.22% and a quarter-over-quarter growth of 6.22%. Additionally, a GAAP earnings per share (EPS) estimate of 68 cents and an adjusted EPS of 82 cents have been forecasted. The GAAP EPS estimate suggests a year-over-year growth of 4.5%, while the adjusted EPS implies growth of 8.38%.
Guidance: Of equal significance to current quarter revenue and EPS is the guidance provided by the company. For the third quarter, analysts anticipate revenue of $25.76 billion, signifying a year-over-year growth of 20.11%. This indicates a noticeable deceleration in growth compared to the second quarter. In the fourth quarter, revenue is projected to grow by 11.33% to $27.07 billion, resulting in full-year 2023 revenue of $101.10 billion. This would represent a year-over-year increase of 24.11%, in contrast to the 51.35% growth experienced in 2022. Moreover, the adjusted EPS for the third quarter is expected to be 87 cents, while for the fourth quarter, it is projected to be 96 cents, leading to a full-year 2023 adjusted EPS of $3.53.
Source: TradingView
Tesla shares have enjoyed an impressive rally this year, driven by multiple factors including Q1 performance, Q2 deliveries, and deals involving the company’s Supercharging network with the likes of Ford, General Motors, and Rivian. Nonetheless, analysts are focused on the impact of the price cuts on the Q2 gross margin.
Tesla’s stock closed at $290.38 per share on Monday, extending its market capitalization beyond $900 billion. From its 6 th of January 2023 low the price has soared 190%. This certainly has investors wondering if it’s time to buy or sell the stock heading into earnings report on Wednesday. While Tesla could beat earnings expectations, holding on the stocks could be rewarding in the long-term only if the company can offer favourable guidance.
From a technical analysis perspective, the intermediate term up trend for the first half of 2023 has exhibited rapid and significant advance. However, this alone does not guarantee a reversal in the trend and shorting a stock solely based on its seemingly excessive rise and overbought momentum conditions might be premature.
Nonetheless, the daily chart indicate vulnerability in Tesla’s rally at its current price levels. This vulnerability coincides with the significant overhead resistance of $309, the overbought and diverging momentum conditions, the upcoming earnings report, and a significant monthly options expiration on the 21 st of July. The earnings report alone could be a binary event that could result in substantial price movement in either direction or even a volatile swing in both directions before settling on a definitive directional move.
Active traders looking for magnified ways to short Tesla may consider our -3x Short Tesla ETP.
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Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
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Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
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