stock has recently been wild. It’s about to get wilder as the electric vehicle company is due to report fourth-quarter earnings after the close of business on Wednesday.
Tesla (ticker: TSLA) bulls will be expecting a big profit surge. They’ll also want to hear some good news from CEO Elon Musk.
For the fourth quarter, Wall Street expects earnings of about $2.33 a share on sales of $17.1 billion. Those numbers are the starting point for what Tesla has to do better than Wednesday.
Those numbers have been rising since the company exceeded delivery expectations. Tesla delivered more than 308,000 vehicles in the fourth quarter. Wall Street projected closer to 270,000 units sold.
The consensus estimate for fourth-quarter earnings was around $1.94 a share at the end of December, before the big delivery figures were released. The highest earnings estimates back then were around $2.60 a share, according to FactSet. Now the highest estimate is around $3 a share.
It could take something close to the high estimate of $3 to push the stock up. Tesla reported third-quarter earnings of $1.86 per share, which was better than the consensus estimate of $1.62 and close to higher estimates of around $1.95 per share.
The pace of third-quarter earnings sent Tesla shares up 3.3% in one day on
rose 0.3% and the
Dow Jones Industrial Average
Exactly what it will take this time to move stocks up or down is really anyone’s guess. The stock market has been very volatile lately. The shares soared 13.5% after the results were released, but are now down 14% year-to-date. Fears of inflation, rising interest rates and a potential economic slowdown have hit shares of highly valued tech stocks including Tesla.
14% less is not so bad. The
It’s also down 14% year-to-date and Tesla shares tend to be a bit more volatile than the market.
Options markets imply that Tesla shares will move more than 10%, up or down, following gains. That reflects all the current uncertainty in the market. Tesla shares are up or down an average of around 3.5% in the following day for the past four quarterly reports.
Earnings will matter, but they won’t be the only thing moving Tesla stock on Wednesday night and Thursday morning. Musk must be at the company’s quarterly conference call. Musk stopped regularly participating in conference calls in mid-2021 and missed the third-quarter call.
Musk is there to offer a product update. That could mean a timed update to the Cybertruck, or it could mean outlining plans for a new, lower-priced EV model that will expand Tesla’s product line into other vehicle segments. A new model or the Cybertruck hitting the roads in late 2022 would be considered good news.
Musk could also talk about commissioning new capacity in Germany and Texas. Wedbush analyst Dan Ives believes rising production will be key for stocks in the coming months. Those two new plants are expected to produce a few hundred thousand vehicles combined by 2022.
“Expanded production is one thing, but it means nothing without demand,” RBC analyst Joe Spak wrote in his report that anticipated earnings. However, he doesn’t see an EV demand shortfall in 2022 and agrees with Ives that 2022 will be about more production from Tesla stock.
Musk could also talk about new batteries for his electric vehicles. Tesla is adopting larger battery cells, believing they will lower costs and improve vehicle performance. It is not known exactly when the largest cells will enter the vehicles.
There will be a lot to see on Wednesday. Recent market volatility adds to the drama of a Tesla earnings report.
Email Al Root at [email protected]
George is Digismak’s reported cum editor with 13 years of experience in Journalism