Proactive Investors - Investors will be on the lookout for signs Tesla Inc (NASDAQ:TSLA) is showing an inflection point in its margins during the third quarter, analysts at Wedbush believe.
The electric vehicle (EV) maker will report earnings for Q3 after the stock market closes on Wednesday.
“Margins will be a key focus on the conference call as the Street want to see a leveling off for Auto GM (ex credits) and track back heading towards the approximately 20% threshold level for 2025,” analysts wrote in a note to clients.
“We need to start seeing this key metric head into the high teens for Q3/Q4 to give the Street comfort much of the price cuts are in the rear-view mirror showing better margin days are ahead for 2025.”
Regarding Tesla’s earnings, they see the company reporting headline numbers generally in line with the Wall Street consensus of revenue of $25.57 billion and earnings per share of $0.58, with potentially slight upside on the margins front.
Focus will also be on CEO Elon Musk’s comments around the consumer EV demand heading into Q4 and 2025, Wedbush believes.
They also expect investors will want more details on Tesla’s autonomous and AI strategy and an update on the timing for a sub $30,000 vehicle.
Full-year vehicle deliveries of 1.8 million remain achievable, with the analysts viewing this as a “solid feat given the extensive while-knuckle moments seen throughout the first half of the year.”
“There are a lot of moving parts in the Tesla story over the next year but ultimately the encouraging China strength seen this quarter will be a linchpin for the bullish Tesla narrative looking ahead while the AI strategy evolves,” they wrote.
“As China continues to heat up on the demand story for Tesla with favorable leasing/financing terms and pent up demand in the region, we are confident that we will see a significant growth figure in the region for Q4 performance continuing off its momentum in Q3 as the company has seen a record few months in this key region leading up to the fourth week in September and should show clear upside in the quarter.”
Wedbush repeated its ‘Outperform’ rating and $300 price target on Tesla, which traded hands at $215.50 in the early afternoon on Wednesday.
- Updated with share price movement -