Tesla is on the verge of announcing its third-quarter earnings report, anticipated to be largely aligned with market expectations. Investors are gearing up for insights from Chief Executive Elon Musk regarding the prospects of electric vehicle demand, as indicated by Wedbush Securities. The electric vehicle manufacturer recently showcased prototypes of a two-seat model dubbed the "Cybercab" and a larger "Robovan," designed for 20 passengers, during its "We, Robot" event.
However, the presentation was met with disappointment from analysts and investors due to a lack of substantial details and updates. Analysts from Wedbush, led by Daniel Ives, observed that while many attendees left the event wanting more information on Tesla's overarching autonomous and artificial intelligence strategies, they anticipate that Musk will provide some clarity regarding the timeline and specifics of the Full Self-Driving and Cybercab initiatives during the upcoming conference call. As Tesla prepares to release its third-quarter results after market closure on Wednesday, Wedbush analysts predict a potential for a "slight upside" in the automaker’s margins—a topic expected to capture significant investor attention during the earnings call.
The market is eager to witness a stabilization of auto gross margins, which is anticipated to exclude credits. There is a pressing need for this critical metric to trend into the high teens in the third and fourth quarters. A move in this direction would reassure the market that the recent price reductions are behind them, fostering optimism for improved margin days as we approach 2025. Earlier in October, Tesla recorded both sequential and annual increases in vehicle deliveries for the third quarter.
However, the total fell short of Wall Street's more optimistic expectations. Nevertheless, Wedbush remains confident that Tesla can meet its goal of delivering 1.8 million vehicles by the end of 2024. Looking ahead to the fourth quarter, Wedbush expects to see notable growth in Tesla's key Chinese market.
While challenges persist in Europe, attributed to subsidies and macroeconomic pressures, the firm believes that an upward stabilization in demand in the U.S. and improving conditions in other global markets will help offset these issues. Wedbush has confirmed its outperform rating on Tesla's stock, reiterating a 12-month price target of $300.
According to Ives, short-term delivery numbers will be pivotal in shaping stock performance, and the investment community will be intently focused on signs of a margin and demand inflection point as Tesla charts its course into 2025..