Tesla Q3 Earnings Preview: It’s All About Demand

It will be another important quarter for Tesla (TSLA) and the markets in general as the EV giant reports Q3 results after the bell on Wednesday.

Wall Street expects Tesla to report:

That revenue figure would represent a jump of more than $5 billion from the second quarter, where Tesla faced COVID-related and operations that optimized shutdowns in Shanghai. Year over year, that estimated revenue figure would be a nearly 61% jump from the third quarter of 2021.

Turning to profitability, Tesla is expected to report adjusted net income and EBITDA numbers above a year and sequentially higher.

FREMONT, CALIFORNI - APRIL 20: A sign is posted in front of a Tesla service center on April 20, 2022 in Fremont, California.

FREMONT, CALIFORNI – APRIL 20: A sign is posted in front of a Tesla service center on April 20, 2022 in Fremont, California.

Looking ahead to the earnings call, investors and analysts will be focused on any clues to the demand story for Tesla, which some fear is cooling in the face of a Fed-induced slowing economy.

“While we believe that demand for Tesla products exceeds supply, it would be unreasonable to assume that there is (a) a limit to how much Tesla can continue to raise prices without demand suffering and (b) ) that the company was not exposed to slowing macroeconomic growth,” Morgan Stanley’s Adam Jonas said in a note to investors two weeks ago.

“A major concern at the moment is demand in China as wait times appear to be decreasing,” RBC Capital Markets said in a note. “The question is whether this is a blip or signs of greater change among consumers.”

Of course, Tesla’s manufacturing outlook will also be scrutinized, with analysts looking for some change in Tesla’s 50% CAGR (compound annual growth rate) target. The ramp-ups in Giga Berlin and Austin will also be a top priority, as will whether or not Giga Shanghai is fully back from its last idling due to operational improvements.

At the end of the products, CEO Elon Musk and team are expected to share more information about the Tesla Semi rollout, which Musk says will be delivered to Pepsi in early September, and whether there will be more updates on the Tesla. Cybertruck’s industrialization process and its future product roadmap.

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For others on the street, to stop Tesla stock’s freefall, the company must outline a realistic growth plan, with analysts like Wedbush’s Dan Ives saying they are “laser-focused” on its strategy to get there.

“For Musk, the clock has struck midnight for the street to stop the excuses and the noise…Now is the time to execute reasonable growth and unity targets in 4Q/2023 and it starts with tomorrow’s conference call,” Ives wrote in a note this morning.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and Instagram.

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