Tesla is set to release its Q2 2024 results on July 23, with expectations of reporting a decline in vehicle deliveries compared to last year. The company delivered 443,956 vehicles in the quarter, slightly ahead of Street estimates but down about 5% year-over-year. Revenue is expected to be around $24.4 billion, a 3% decrease from last year, while earnings are projected to be approximately $0.60 per share, in line with consensus estimates. The dampening demand for Tesla vehicles can be attributed to factors such as high interest rates, aggressive price cuts, and increasing competition, especially in markets like China where local manufacturers are offering compelling EVs at attractive prices. Tesla has also been dealing with a rising inventory of vehicles, but measures have been taken to reduce this surplus.
Margins will be closely watched for the quarter, as Tesla has seen a drop in the average price of its vehicles in Q1 2024, leading to lower gross margins. The company reduced prices for some of its models in Q2 as well, which could further impact margins. Tesla’s stock has experienced fluctuations in recent years, with gains of 10% since early January 2021, but underperforming the S&P 500 in 2022. The Trefis High Quality Portfolio, on the other hand, has consistently outperformed the S&P 500 over the same period. With the current uncertain economic environment, Tesla’s performance in the coming months remains a question, particularly as it faces challenges such as high oil prices and interest rates.
Despite a recent rally in Tesla stock, the company’s fundamental performance does not necessarily align with its stock price gains. While Tesla is poised to benefit from the shift towards cleaner transportation and energy generation in the long term, its deliveries and earnings are expected to face pressure this year. Factors such as high interest rates, limited charging infrastructure, and declining resale values for EVs are likely impacting demand. The market for early EV adopters may also be reaching saturation, leading to lower overall demand. Trefis values Tesla stock at $177 per share, below the current market price, and highlights the challenges and opportunities facing the company in the EV space. For a detailed analysis of Tesla’s business model, revenue trends, and valuation, readers can refer to Trefis articles for more insights.
