:max_bytes(150000):strip_icc()/GettyImages-490597722-d01786afc5bf4a73ad3f9ddefe56bdb4.jpg "What You Need to Know Ahead of Tesla’s Earnings")
Key Takeaways
- Tesla Inc. is to report earnings for the fourth quarter on Wednesday after market close, with analysts projecting revenue of around $25.88 billion, operating income near $2.23 billion, and earnings per share at 78 cents.
- The electric vehicle (EV) maker reported record-high quarterly deliveries in the fourth quarter as average sales prices dropped, according to Kelley Blue Book estimates.
- CEO Elon Musk could touch on cost-cutting measures to offset weak Cybertruck margins, increased labor costs, and losses from supply-chain disruptions.
Tesla Inc. (TSLA) is set to post fourth-quarter earnings on Wednesday, Jan. 24, at 5:30 p.m. ET after reporting record-high deliveries. Chief Executive Officer (CEO) Elon Musk could comment on how the electric vehicle (EV) pioneer will offset sale price cuts, increased labor costs, and losses from supply-chain disruptions.
Revenue is expected to be around $25.88 billion, according to consensus estimates collected by Visible Alpha, up from the previous quarter and the fourth quarter of 2022, when revenue came in at $23.35 billion and $24.31 billion, respectively.
Analysts anticipate adjusted earnings per share (EPS) will rise to 78 cents, up from 66 cents in the third quarter, but down from $1.19 in the same period of the previous year. Operating income is expected to be $2.23 billion, up from $1.76 billion in the third quarter but off from $3.39 billion in the fourth quarter of 2022.
| Analyst Estimates for Q4 2023 | Q3 2023 | Q4 2022 | |
| Revenue | $25.88 billion | $23.35 billion | $24.31 billion |
| (Diluted) Earnings Per Share | $0.78 | $0.66 | $1.19 |
| Operating Income | $2.23 billion | $1.76 billion | $3.39 billion |
Key Metric:
Tesla already reported record-high quarterly deliveries for the fourth quarter. Declining prices could have contributed to stronger sales, with the average transaction price for a Tesla vehicle at $50,051 in December, a more than 25% drop from the previous year, according to Kelley Blue Book estimates.
Last quarter, Musk said the EV maker’s price cuts were ineffective due to high interest rates. Since then, the Fed has indicated that rate cuts are coming in 2024, although pricing pressure could still take a toll on Tesla’s earnings.
Despite the strong delivery numbers, analysts at Deutsche Bank said that the firm “continue[s] to see large downside risk to earnings expectations, due to a much lower volume outlook than the market assumes, pricing pressure, Cybertruck margin impact, and higher tax rate in China.”
Business Spotlight
In the fourth quarter of 2023, Tesla officially launched the Cybertruck, which was first announced in 2019. The launch was followed by investor concerns about scaling Cybertruck production and deliveries. Wedbush Securities analysts said they expect the company won’t see positive cash flow from the vehicle for another 12 to 18 months.
Musk and other Tesla officials could comment on cost-cutting measures to offset increased labor costs and losses associated with supply-chain challenges.
Tesla reportedly has increased wages for some production employees amid pressure to unionize by the United Auto Workers (UAW) union. Deutsche Bank analysts estimated the increased wages could cost $360 million in incremental annual labor cost, a 3% hit to 2024 earnings before interest and taxes (EBIT).
The company announced a production stoppage at its Berlin facility due to supply chain disruptions in the Suez Canal. Bank of America analysts said Tesla was the only automaker in their coverage to be impacted but they “expect that other companies with a large footprint in Europe, mainly suppliers, may be negatively affected.”
Tesla shares doubled in 2023 significantly outpacing all major indexes along with other Magnificient 7 stocks.