Wall Street is cutting third-quarter earnings estimates for Tesla after the electric-vehicle giant reported a bigger-than-expected drop in deliveries during the period. Tesla stock edged up early Wednesday.
With Tesla announcing third-quarter earnings and revenue on Oct. 18, analyst predictions are dropping, as delivery data last week came well below the revised Wall Street consensus.
Analysts put Tesla earnings at 73 cents per share, down 4 cents vs. Sept. 29 and 47% below the forecast at the end of 2022, according to FactSet. Analysts are also cutting full-year earnings estimates for Tesla following the Oct. 2 deliveries announcement, dropping them 3 cents vs. the September 29 forecast.
The full-year view now puts Tesla earnings at $3.28 a share, down more than 40% compared with expectations at the end of 2022, according to FactSet.
Tesla stock edged up 1% Wednesday during premarket action. On Tuesday, TSLA gained 1.5% to 263.62 Tuesday. On Monday, TSLA pared early losses, closing down 0.3% to 259.67. Last week, Tesla stock gained more than 4% as it missed on deliveries and chopped U.S. Model 3 and Model Y prices, reducing the base Model 3 RWD price by $1,250 to $38,990 and the Model Y Long Range by $2,000 to $48,490.
Tesla bulls appear to be betting on a fourth-quarter rebound in deliveries with the revamped Model 3 in China and the expected Cybertruck delivery launch.
Ahead of Tesla's delivery release on Oct. 2, Wall Street estimates already had dropped to 456,000 from 473,000 at the end of July. However, Tesla delivered 435,059 during the third quarter, falling 6% compared with the second quarter.
The EV giant said the drop-off was due to "planned downtimes for factory upgrades, as discussed on the most recent earnings call."
Tesla Earnings Concern Is 'Well Founded'
Tesla stock analyst Adam Jonas from Morgan Stanley wrote last week that "investors must contemplate further deflation across the EV complex that may drive an adverse reset of margin expectations. "
"Investor concerns over the direction of near term earnings revisions (3Q and 4Q23) are well founded," Jonas wrote.
The analyst forecasts Tesla full-year earnings of $3.26 per share, below Wall Street's current estimate. However, Tesla bulls are betting on a fourth-quarter rebound in deliveries with the revamped Model 3 in China and the expected Cybertruck delivery launch.
Wedbush analyst Dan Ives, a longtime Tesla bull, said the carmaker is "entering the next stage of growth" in a note to clients last week. Ives expects Cybertruck production to kick off around the end of October.
Ives added that Tesla's decision to maintain its 2023 volume outlook of 1.8 million units implies a "strong" fourth quarter is needed to hit that number. The Wedbush analyst projects third-quarter earnings of 78 cents per share for Tesla.
Tesla Stock Performance
Last week, Tesla stock popped 4.1% to 260.53. On Wednesday, shares jumped 5.9%, surging above the 50-day line and offering an early entry. Shares fell back Friday morning to the 50-day line, but rebounded for a slight gain.
Tesla stock currently resides in a cup-with-handle base, with a 278.98 buy point, according to MarketSmith.
Analysts also maintain that the United Auto Workers strike against Ford, General Motors and Stellantis is good news for Tesla, a nonunion shop.
Tesla stock ranks fourth in the 35-stock IBD automaker industry group. The S&P 500 component has a 96 Composite Rating out of a best-possible 99. Shares have an 96 Relative Strength Rating and its EPS Rating is 93.
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