Why is Tesla (TSLA) up 11.1% since its last earnings report?

It’s been a month since Tesla’s (TSLA) last earnings report. Shares have risen about 11.1% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Tesla facing a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Tesla’s first-quarter earnings miss estimates

Tesla reported first-quarter adjusted EPS of 45 cents, missing the Zacks Consensus Estimate of 46 cents and down from 85 cents a year earlier. This marked the company’s third consecutive lack of profits, after ten quarters in a row of good results. Total revenue of $21.3 billion missed the consensus estimate of $22.6 billion and fell 9% year-over-year. The company remained cautious regarding the vehicle volume growth dynamics in 2024, which is expected to be noticeably lower than in 2023.

Key takeaways

Tesla’s first quarter production was 433,371 units (412,376 Model 3/Y and 20,995 other models), down 2% year over year and missing our estimate of 474,571 units. The company delivered 386,810 vehicles, down 9% year-on-year and below our estimate of 439,292 units. The 3/Y recorded deliveries of 369,783 vehicles, down 10% year-on-year and falling short of our forecast of 413,323 units.

Total automotive revenues of $17.38 billion declined 13% year-over-year and missed our estimate of $20.87 billion. The reported figure also included $442 million in electric vehicle regulatory credit sales, down 15.2% year-over-year. Auto sales, excluding leasing revenues and regulatory credits, were $16.46 billion, missing our forecast of $19.85 billion.

Automotive gross profit was $3.2 billion. Automotive gross margin was 18.5%, down from 21.1% recorded in the first quarter of 2023 and falling short of our forecast of 18.6%. Tesla’s operating margin declined 592 basis points year-over-year to 5.5% in the quarter and was also below our estimate of 8.2%.

Energy generation and storage revenue was $1.64 billion in the first quarter of 2024, up from $1.53 billion in the prior-year quarter but missing our estimate of $1.84 billion. Notably, energy storage deployment was 4.05 GWh, lower than our forecast of 4.2 GWh.

Services and other revenues were $2,288 million, up 25% year-over-year and exceeding our estimate of $2,273.7 million. Supercharging, parts sales, used vehicle sales and merchandise sales drove year-over-year growth.

The story continues

Financial

As of March 31, 2024, Tesla had cash/cash equivalents/investments of $26.86 billion compared to $29.1 billion as of December 31, 2023. Long-term debt and finance leases, net of current amounted to USD 2,899 million, compared to USD 2,857 million as of December 31, 2023.

Net cash flow from operations was $242 million in the first quarter of 2024. In the quarter under review, capital expenditures amounted to USD 2.77 billion. Tesla reported negative free cash flow of $2.53 billion in the reported quarter, compared to positive free cash flow of $441 million generated in the prior-year period.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

VGM results

Currently, Tesla has a Poor Growth Rating of F, which indicates the same momentum score. Following exactly the same trajectory, the stock is rated F for value, putting it in the bottom quintile for this investment strategy.

Overall, the company’s overall VGM score is F. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Tesla carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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