(Bloomberg) — Tesla Inc. is looking increasingly like an outlier among the tech giants as its stock price falls and profits shrink. Investors are worried that the quarterly results will make the electric car maker even more of an outlier.
Most Read Articles on Bloomberg
Elon Musk’s company is the only company in the so-called “Magnificent Seven” whose latest quarterly results are expected to show lower profits, and the only one where Wall Street’s expectations are lower than a year ago. It is a company. The company’s stock price fell 12% this year through Tuesday’s close, while all of its big tech peers rose. Despite this, it’s still the most expensive stock in the group when plotted next to earnings, making for a tough situation for earnings.
The results, which will be released after Wednesday’s close, might not have been as important had Tesla scared investors earlier this month with a splashy self-driving car announcement. However, robotaxis failed to meet high expectations, putting further pressure on the company’s mainstay business, EV sales.
“Investors are starting to lose patience with Tesla, especially after the long-conceived but unfulfilled robotaxi event, and because growth expectations for Tesla’s core business over the next two years remain low.” said David Wagner, Tesla portfolio manager. Aptas Capital Advisors.
Tesla shares were down 2% as of 2:45 p.m. in New York on Wednesday ahead of earnings results.
Wall Street will be watching for signs that the slowdown in EV sales is nearing a bottom, and will be keeping an eye on margins that have been under pressure over the past year. Investors also want to know more about cheaper EV models.
While a series of better-than-expected numbers should help boost some confidence in the short term, analysts say it may be difficult for the stock to move much higher unless long-term growth becomes clearer. It warns that there is no.
“Regardless of third-quarter results, a sustained bullish rerating is unlikely until investors have reason to raise expectations,” Piper Sandler analyst Alexander Potter said in a note. There is a gender,” he said. Potter expects those reasons to become clearer next year, including new product launches in new regions such as China and regulatory approvals for the company’s advanced driver assistance software.
story continues
Analysts on average expect the company to report earnings per share of 60 cents for the three months ending Sept. 30, down 10% from a year ago. Sales are estimated at about $25.4 billion, up 8.9% from a year ago, according to data compiled by Bloomberg.
The third-quarter estimate is a significant decrease from a year ago, when analysts were expecting EPS of $1.09. Meanwhile, auto gross margin excluding regulatory credit, the main metric that traders are watching, is expected to be 14.9%, up slightly from 14.6% in the second quarter.
“The most important factors for stock prices in the short term are whether demand trends are above or below expectations and whether gross margins are above or below expectations,” said Cole Wilcox, portfolio manager at Longboard Asset Management. Ta. Although Tesla’s position in the EV market remains strong compared to rivals, “demand for EVs is not the explosive high-growth category it once was,” Wilcox said.
Tesla has been at the forefront of a slowdown in EV demand since late 2023, as consumers hold off on big-ticket purchases due to inflation, high borrowing costs and nervousness about a slowing economy. The company responded by aggressively lowering prices to lure buyers and dampen new competition. Although this helped the company win some customers, it was unable to fully offset the weak demand, and both revenue and profits suffered.
Lower earnings estimates also make Tesla’s stock valuation look even more expensive. At a forward P/E ratio of 74 times, it is the most expensive of the giant group of stocks that includes Amazon.com, Microsoft, Apple, Alphabet, Meta Platforms, and Nvidia.
Still, investors say the company’s position among the Magnificent Seven remains valid given Tesla’s potential to innovate and dominate the auto industry in the future, when self-driving cars become the norm. claims.
“Tesla’s future earnings are extremely important, but they are part of a bigger picture,” said Adam Sirhan, founder and CEO of 50 Park Investments. “For now, it is premature to exclude Tesla from Mag 7, but the pressure is certainly on for the company to prove its worth.”
top technology stories
Arm Holdings Plc has revoked a license that had allowed longtime partner Qualcomm Inc. to design chips using Arm’s intellectual property, as a legal dispute over key smartphone technology escalates. There is.
Apple CEO Tim Cook pledged to continue investing in China in a meeting with top technology officials in Beijing, underscoring the country’s important role in the iPhone maker’s global expansion.
An investigation into Huawei’s latest AI products has uncovered advanced processors made by Nvidia’s manufacturing partner Taiwan Semiconductor Manufacturing Co., Ltd. This suggests that China is still struggling to reliably manufacture its advanced chips in sufficient quantities.
Christoph Fouquet, CEO of ASML Holding NV, expects pressure from the US to further restrict sales of semiconductor technology to China, the biggest market for Dutch semiconductor equipment makers. are.
Earnings deadline is Wednesday
pre-market
Amphenol
roper
Teledyne
AT&T
After marketing
IBM
ServiceNow
ram research
tyler tech
Teradyne
Impini
pegasystems
ASGN
plexus
max linear
T-Mobile
(Updates the stock price trend in the 5th paragraph.)
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
