Tesla Inc. (TSLA) will release its third quarter financial report next Wednesday, and after a new round of price cuts, concerns about the profit margin and demand situation of the electric vehicle manufacturer have reignited.
Morgan Stanley analyst Adam Jonas said in a report on Thursday that the market is becoming cautious about Tesla's earnings expectations for the rest of the year, and there is a possibility of a downward revision to the earnings expectations.
Jonas stated that in addition, due to the perceived instability of the coming year, many investors are skeptical that Tesla's profits will achieve growth next year. Jonas stated that he recently hosted an event for Tesla investors to discuss their outlook for the company.
Jonas said that these investors have little enthusiasm for Tesla's next model, the Cyberrack.
Tesla Inc. (TSLA) will release its third quarter financial report next Wednesday, and after a new round of price cuts, concerns about the profit margin and demand situation of the electric vehicle manufacturer have reignited.
Morgan Stanley analyst Adam Jonas said in a report on Thursday that the market is becoming cautious about Tesla's earnings expectations for the rest of the year, and there is a possibility of a downward revision to the earnings expectations.
Jonas stated that in addition, due to the perceived instability of the coming year, many investors are skeptical that Tesla's profits will achieve growth next year. Jonas stated that he recently hosted an event for Tesla investors to discuss their outlook for the company.
Jonas said that these investors have little enthusiasm for Tesla's next model, the Cyberrack.
This non-traditional style of electric pickup truck will have a break-in issue at the beginning of its launch, which is believed to keep the iteration of Tesla models relatively slow. The only solution is to lower prices.
Analysts surveyed by FactSet expect Tesla's adjusted third quarter earnings per share to be 73 cents, with sales of $24.3 billion. By comparison, the adjusted earnings per share for the same period last year were $105 and sales were $21.5 billion.
Tesla's series of price cuts have once again raised concerns among investors about the company's profit margin, with the most recent price cut announced last week.
Gene Munster of Deepwater Asset Management stated in a recent report that the key keyword for Tesla's third quarter financial report is profit margin.
Munster said that operating profit margin is the core of a key investment debate surrounding Tesla, and it is also the key to whether Tesla is an automotive company or a technology company.
However, more importantly, Tesla's automotive gross profit margin has been declining over the past three quarters, from 24.3% in December last year to 18.1% in June this year, all of which are related to price reductions.
Munster said that Tesla's gross profit margin may decline again in the third quarter, but it may rebound in the fourth quarter.
Joseph Spark of UBS recently lowered his profit expectations for Tesla in the coming years, citing downside risks to these expectations. He said, "We predict that... Tesla's earnings per share will be slightly lower than expected
Tesla's third-quarter delivery volume announced earlier this month was lower than expected.
Citi analyst Itay Michaeli said that given the limited destocking in the third quarter, recent price reductions in the United States, and current valuations, the market's response to Tesla's third quarter financial report is likely to be similar to a "neutral to slightly negative" response to the company's second quarter financial report.
Tesla's stock price has risen by 114% so far this year, while the S&P 500 index has risen by about 14% during the same period.