Tesla Q2 Financial Results Preview: Should You Buy or Sell TSLA Stock Ahead of the Report?

The second-quarter earnings season is starting in earnest this week, and among the notable reports to watch are Tesla (TSLA) and Alphabet (GOOG). It’s been a particularly bleak year for Tesla, as the electric vehicle (EV) giant has been in the red for 2024 throughout the first half. The Elon Musk-led company actually turned positive on a year-to-date basis earlier this month, but turned negative again on a year-to-date basis late last week.

Here are analysts’ forecasts for the company’s Q2 report and stock forecasts ahead of the results announcement.

Tesla Q2 Results Preview

Analysts are expecting Tesla to report revenue of $24.7 billion in Q2 — a year-over-year decline of 0.9%. The expected revenue decline is not surprising, as Tesla’s deliveries fell year-over-year in Q2. While deliveries were still better than expected, it was the first time in a decade that the company’s deliveries fell for two consecutive quarters.

Analysts are predicting Tesla’s earnings per share (EPS) will fall 41% year over year to $0.46. Tesla has repeatedly cut vehicle prices over the past few years, which has hit its once industry-leading margins.

What to Look for in the TSLA Earnings Report

There will be a lot to watch when Tesla reports its second-quarter financial results on Tuesday, but I’ll be paying special attention to the following:

• Deliveries Forecast: During the Q1 earnings call, Musk sounded confident that Tesla should be able to report year-over-year growth in deliveries in 2024. However, during the Q2 earnings call, markets will want to hear more details on the deliveries forecast and whether Tesla is still confident of increasing its deliveries in 2024 despite their decline in the first half of the year.
• China Comments: It will be worth watching Tesla’s comments on its China business, which is facing stiff competition from companies like BYD (BYDDY). Wedbush Securities analyst Dan Ives believes the company’s China business is recovering. Tesla could also comment on its partnership with Chinese tech giant Baidu (BIDU), which could help it bring fully autonomous driving (FSD) to the world’s largest automotive market.
• New Models and Model Y Refresh: Tesla is looking to launch a low-cost model early next year. The company could talk more about the model during its Q2 earnings call, which could help it expand its addressable market. It could also comment on a Model Y refresh, which Musk previously ruled out for at least this year.
• New timeline for Robotaxi: While Tesla isn’t known for sticking to the aggressive timelines it sets, robotaxi and FSD stand out in particular. The company is expected to miss its August 8 deadline to unveil robotaxi, and Musk could provide a new timeline during the earnings call. Additionally, the company could talk about progress toward full autonomy.

Tesla Stock Forecast

Tesla has received a consensus rating of “Hold” from analysts. Out of 33 analysts covering the stock, 9 have rated it as a “Strong Buy,” while 2 have said it is a “Moderate Buy.” Fourteen analysts have rated TSLA as a “Hold,” while 8 have said it is a “Strong Sell.”

Tesla rebounded from its lows to surpass the average price target of $193.03, while the high price target of $310 is almost 30% higher than the previous week’s closing prices.

Analysts are divided at best on Tesla ahead of Q2; while Barclays’ Dan Levy expects further margin pressure, Baird’s Ben Kallo expects a better net result, mainly due to stable prices and strong revenue from the energy segment.

Are TSLA shares worth buying or selling?

Tesla needs to convince markets that it can continue to ramp up deliveries at a rapid pace without compromising margins too much. The price war it has sparked has squeezed not only Tesla’s margins but those of other EV players. The company also needs to demonstrate its prowess in artificial intelligence (AI), a key factor in its still-massive valuation.

ARK Invest’s Cathie Wood — who Musk says has a better understanding of Tesla’s business than most — believes the company is the “greatest AI project” in the world. Last month, ARK Invest revised its price target for Tesla to $2,600, which it expects to hit by 2029. The company’s bearish and bullish price targets are $2,000 and $3,100, respectively.

Ives shares Wood’s optimistic outlook and believes Tesla is “the most underrated player in AI.” However, ongoing delays in full autonomy and robotaxi have some worried about whether Tesla will be able to deliver its most ambitious and futuristic products. Still, Tesla has proven skeptics wrong, with annual vehicle deliveries reaching nearly 2 million units.

However, concerns about AI products are not unfounded. While it is still early days for Tesla’s Dojo supercomputer and humanoid Optimus, markets now expect visible progress in FSD and robotaxi, which have long been in production.

Overall, despite the near-term challenges, I won’t write off Tesla just yet. While I don’t expect much fireworks from the stock after this week’s earnings release, I’d be a buyer of any significant weakness after the report.

On the date of publication, Mohit Oberoi held positions in: TSLA, GOOG. All information and data in this article is for informational purposes only. For more information, please refer to Barchart’s Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.