October has been a big month for Tesla and Wednesday's third-quarter earnings mark the last of three major announcements. However, so far neither Q3 deliveries nor the robotaxi event has been a catalyst sending Tesla stock higher and TSLA shares head into earnings down more than 16% this month.
Analyst consensus predicts Tesla quarterly profit falling 9% to 59 cents per share while revenue is expected to increase about 9% to $25.47 billion in Q3, according to FactSet. However, some have the revenue coming in lower than that number.
In early October, Tesla reported global third-quarter deliveries increased 6% compared to a year ago, hitting the third best quarterly total ever, as the EV giant saw vehicle unit sales return to growth for the first time in 2024 buoyed by a strong performance in China.
With the robotaxi event out of the way, analysts and investors are once again keying in on Tesla's auto gross margins, excluding regulatory credits and leases, and will look to see if they have bottomed. Tesla auto gross margins came in at 14.6% in Q2 and the consensus view is that auto margins will increase a fraction in Q3 to 14.7%, according to FactSet.
Coming out of the Oct. 10 robotaxi reveal, investors will be looking for details on the Q3 earnings call about Full Self-Driving specifics, information on the still-unseen "affordable" vehicle as well as any commentary on the long-awaited Model Y refresh.
Wall Street consensus also has 2024 Tesla earnings firmly below last year's level. That signals another year of earnings declines for this growth stock. Analysts currently expect Tesla earnings per share of just $2.24 in 2024, according to FactSet. That would be about a 30% decline vs. $3.12 in 2023.
As analysts await the Q3 earnings call, the top question for investors is always, when is it a good time to buy or sell Tesla stock.
Tesla Stock: The Robotaxi Event
Chief Executive Elon Musk set sky-high expectations for the "We Robot" event. But after showing off a Cybercab and Robovan late on Oct. 10, the market seemed unimpressed with Musk as he once more claimed full autonomous driving will come "next year" but did not offer any details or updates of an "affordable" EV.
The event was high on theatrics with Musk riding the two-seat Cybercab, with butterfly doors and no steering wheel, briefly to the stage to give his remarks. Dancing Optimus robots were paraded out with the Tesla humanoids serving attendees drinks. However, the consensus among analysts was that while the event was high on pomp and circumstance, it underdelivered on details.
"That's it? Disappointing lack of detail," Adam Jonas, Morgan Stanley's high-profile auto analyst and a TSLA bull, proclaimed in his investor note following the event. Wells Fargo analysts echoed that sentiment, writing that Tesla's robotaxi event was mostly "razzle-dazzle" with "little substance."
Jonas said he had been looking for on quantifiable data on the improvements to Tesla's Full Self-Driving, known as FSD. Jonas was also expecting strategy on the business for a supervised and unsupervised ride-sharing service.
"We were overall disappointed with the substance and detail of the presentation. As such, we anticipated TSLA to be under pressure following the event," Jonas added.
Tesla Robotaxi Event: Cybercab, Robovan Unveiled; Musk Sees Self-Driving 'Next Year'
What Investors Learned
Musk did say he expects the Cybercab price tag will be below $30,000, with production starting "before 2027."
Further, Musk expects "fully autonomous unsupervised FSD in California and Texas next year — that's with the Model 3 and Model Y."
However, Musk admitted, "I tend to be a little optimistic with time frames."
Musk has said for years that Tesla would achieve self-driving "this year" or "next year," while production targets often slip considerably. He also didn't offer new evidence that Tesla FSD was making progress toward actual self-driving.
The Tesla chief also showed off the latest Optimus robot. He expects that the cost could be $25,000-$30,000 when produced at scale.
Cathie Wood Buys The Sell Signal
Tesla stock sold off hard the day following the robotaxi event, sending a sell signal to investors. However, Cathie Wood and her Ark Invest ignored that and purchased nearly $3 million in TSLA shares.
Wood, who has long been super-bullish on Tesla's autonomy push and robotaxi aims, attended Tesla's robotaxi event on Thursday. On June 12, Ark Invest updated its Tesla stock price target to 2,600 by 2029, estimating that around 90% of Tesla's enterprise value and earnings will be attributed to the robotaxi business in 2029.
Wood's Ark Invest tends to purchase Tesla stock and other positions amid sell-offs or when they break below key moving averages.
Without a robotaxi network and business, Ark Invest says its TSLA price target would be around $350 per share, according to the report.
"We remain confident that the service will launch within the next five years," Ark Invest said.
Tesla: Second-Quarter Earnings
The EV giant's second-quarter earnings sank compared to a year ago. On July 23, Tesla reported that Q2 earnings fell 43% to 52 cents per share. Meanwhile, quarterly revenue totaled $25.5 billion, up 2% vs. the year-earlier quarter. Analysts had predicted Tesla would report earnings of 61 cents a share with sales sliding to $24.54 billion, according to FactSet.
Tesla announced it "achieved record quarterly revenues despite a difficult operating environment." However, Tesla's gross margins fell 23 basis points to 18%. Auto gross margins, excluding regulatory credits and leases, came in at 14.6%, inline with analyst expectations, according to FactSet.
This comes after Musk on the Q1 earnings call said that "if somebody doesn't believe Tesla is going to solve autonomy" that they "should not be an investor in the company." The Tesla chief doubled down on this line on the second-quarter conference call.
Tesla has said plans for new vehicles, including affordable models, remain on track to start production in the first half of 2025. That suggests that mass production won't start until late 2025 at the earliest.
There were media reports going into Q2 that Tesla had decided to scrap its next-generation Model 2, a $25,000 vehicle.
Meanwhile, Tesla also said in its July earnings report that its vehicle volume growth rate in 2024 "may be notably lower than the growth rate" last year. The EV giant added that growth in its energy storage business should outpace its automotive segment.
Musk in the Q1 earnings call said he expected 2024 vehicle deliveries to grow compared to 2023. The EV giant saw deliveries in 2023 hit a record 1.81 million.
Tesla and Musk would have to see a record-setting Q4 for them to reach the 1.8 million number.
Musk And Tesla Control
Tesla shareholders also voted this year in favor of giving Musk his 2018 $56 billion pay package and reincorporating the company in Texas, moving it from Delaware.
Prior to the vote, Musk hinted he felt he needed more TSLA shares and voting power before making Tesla a "leader in AI & robotics."
In January, Musk posted on X that he's "uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control." The chief executive added that he wants enough shares to be "influential but not so much that I can't be overturned."
Musk currently has a nearly 13% stake in Tesla. Prior to selling TSLA shares to purchase Twitter, now X, for $44 billion in late 2022, Musk owned around 22% of Tesla.
Elon Musk, Layoffs And Superchargers
With Musk focused on full self-driving and artificial intelligence, he has also been shaking up Tesla, letting top executives go and announcing layoffs, this year.
Musk decided to let two top executives go while also cutting the EV company's entire supercharger team, according to reports on April 30.
In late April, Musk dismissed Rebecca Tinucci, senior director of Tesla's supercharger efforts, and Daniel Ho, head of the new vehicles program. The Tesla CEO also reportedly cut teams under Tinucci and Ho along with laying off its public policy employees and the entire staff working on Tesla superchargers.
However, since then he appears to have since started hiring back employees.
Musk also decided in April to lay off more than 10% of Tesla's global workforce, an effort to prepare for the "next phase of growth." Drew Baglino, who served as senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development, both departed Tesla around the time of those cuts.
Meanwhile, reports emerged on Aug. 20, that Uber has hired Tinucci to oversee the company's shift to electric vehicles. Tinucci will start her new position on Sept. 16.
In October, U.S. robotaxi industry leader Waymo, a unit of Alphabet, hired Daniel Ho.
Tesla EVs In Regulators' Sights
The National Highway Traffic Safety Administration announced on Oct. 18 it has opened a preliminary investigation into Tesla's Full Self-Driving, or FSD, technology in more than 2 million vehicles amid reports of four collisions, including one fatal accident, that appear to involve the autonomous driving feature in reduced visibility conditions.
The regulators said the investigation will cover 2.4 million Tesla vehicles and will look at how FSD technology detects and responds to low visibility conditions.
In December 2024, Tesla performed an over-the-air software "recall" on more than 2 million vehicles after federal regulators determined Tesla's Autopilot system is prone to misuse after reviewing 1,000 accidents.
Is Tesla Stock A Buy?
Tesla has dropped more than 16% in October, booking its worst weekly loss since April between Oct. 7-Oct. 11. TSLA capped the week with a 8.8% tumble on Oct. 11, falling decisively below its 50-day moving average in heavy volume.
Tesla Robotaxi Event: Cybercab, Robovan Unveiled; Musk Sees Self-Driving 'Next Year'
The Oct. 11 sell-off followed the much-hyped Tesla robotaxi event. Musk showed off the Cybercab along with the Robovan and once again predicted fully autonomous Tesla vehicles will hit the roads next year. However, analysts broadly were disappointed with the lack of details or specifics from the Tesla head.
Tesla also didn't show off an "affordable" model, a still-unseen EV that's supposed to start production in early 2025. That, along with a refreshed Model Y, is key to Tesla boosting or at least maintaining delivery levels next year.
The stock is in a cup-with-handle base with a traditional 264.86 buy point, according to MarketSurge charts.
Tesla stock ranks fourth in the 35-member IBD Auto Manufacturers industry group. The stock has a 52 Composite Rating out of a best-possible 99. Shares also have a 52 Relative Strength Rating and a 57 EPS Rating.
Almost single-handedly, Elon Musk has turned the auto industry on its head. He has essentially forced it to get aboard the electric-vehicle train. Tesla has been a monster stock over much of its history, especially during its stratospheric run from mid-2019 to late 2021.
Tesla stock is in a cup-with-handle base, but shares flashed a sell signal on Oct. 11 and are currently below the 50-day line.
Please follow Kit Norton on X @KitNorton for more coverage.
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