Tesla’s Upcoming Earnings: Can They Beat Expectations?
Electric car manufacturer Tesla Motors (TSLA) is set to disclose its financial results for the third quarter of 2024 on October 23, following the market’s close.
Over the past three months, Tesla’s stock has dropped by 13%, slightly better than the industry’s 14.8% decline. The recent Robotaxi event underwhelmed investors, leading to a 9% decline in shares since October 10. If Tesla can surpass earnings expectations, this negative trend could shift. Notably, Tesla received positive revisions in earnings estimates for the upcoming quarter, often signaling a potential earnings increase (read: Time for Uber-Lyft ETFs After Tesla’s Unimpressive Robotaxi Event?).
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Focus Shifts to Key ETFs
Exchange-traded funds (ETFs) heavily invested in Tesla include Direxion Daily TSLA Bull 2X Shares (TSLL), ARK Innovation ETF (ARKK), Consumer Discretionary Select Sector SPDR Fund (XLY), Simplify Volt Robocar Disruption and Tech ETF (VCAR), and ARK Autonomous Technology & Robotics ETF (ARKQ). These funds are currently capturing investor attention as earnings day approaches.
Examining Earnings Estimates
Tesla currently holds an Earnings ESP of -1.28% and a Zacks Rank of #2 (Buy). This ranking, in combination with either a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2, or 3 (Hold), enhances the likelihood of surpassing earnings expectations. Recent earnings estimate revisions show an increase of just one cent over the past week for the yet-to-be-reported quarter. Typically, such last-minute changes from analysts indicate favorable conditions for a stock. The Zacks Consensus Estimate for the third quarter predicts a significant year-over-year earnings decrease of 12.1%, paired with a revenue growth expectation of 9.5%. However, Tesla’s earnings history reveals a concerning trend, with an average negative earnings surprise of 7.99% over the last four quarters.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Tesla, Inc. Price, Consensus and EPS Surprise
Tesla, Inc. price-consensus-eps-surprise-chart | Tesla, Inc. Quote
Encouraging Q3 Delivery Numbers
Earlier this month, Tesla returned to an upward delivery trend in the third quarter, marking a significant recovery after two straight quarters of decline. The company reported its third-largest quarterly delivery number in history (read: Tesla Returns to Delivery Growth but Shares Slip: ETFs in Focus).
During Q3, Tesla delivered a total of 462,890 vehicles (including 439,975 Model 3/Y and 22,915 from other models), representing a 6.4% increase year-over-year. This growth marks Tesla’s first annual increase in 2024 but fell slightly short of FactSet StreetAccount’s estimate of 463,310. The company produced 469,796 vehicles during this quarter, consisting of 443,668 Model 3/Y and 26,128 other models. The delivery success shows that some of Tesla’s recent initiatives to boost demand are beginning to yield results.
Future Developments to Watch
Investors are eagerly anticipating Tesla’s plans for an affordable electric vehicle priced below $30,000, alongside the long-term vision for their Cybercab, especially following the lackluster Robotaxi event. During the event on October 10, CEO Elon Musk introduced prototypes of the anticipated Cybercab, a self-driving vehicle aimed at being available for under $30,000, with production expected to start in 2026. Tesla also presented a Robovan concept, designed to accommodate up to 20 passengers. Both vehicles demonstrate Tesla’s ambitions within the autonomous transport sector, as the Cybercab aims to be an accessible option for consumers interested in using or renting autonomous vehicles through Tesla’s network.
Tesla’s strategy heavily relies on its camera-based Full Self-Driving (FSD) system, which differs from competitors like Waymo, who utilize costly lidar and radar technologies. Tesla aims to commence production of new, affordable electric vehicle models by early 2025—these models will be manufactured using Tesla’s next-generation platform at the same facilities as current offerings.
Highlights of Key ETFs
Direxion Daily TSLA Bull 2X Shares (TSLL)
This is the largest U.S.-listed single-stock ETF with assets under management (AUM) of $2.1 billion. It aims to generate double the daily percentage change of Tesla stock, with an annual fee of 86 basis points.
ARK Innovation ETF (ARKK)
An actively managed fund focusing on companies innovating in various fields, including technology and scientific research. Tesla is the largest investment, at 13% of the total 34 securities held. ARK Innovation ETF has AUM of $5.6 billion and charges 75 basis points in fees annually.
Consumer Discretionary Select Sector SPDR Fund (XLY)
This ETF tracks the Consumer Discretionary Select Sector Index, containing 50 securities, with Tesla as the second-largest holding at 12.5%. The fund is one of the largest in its category, boasting $19.8 billion in AUM and charging 9 basis points in annual fees. It has a Zacks ETF Rank of #2 and a medium risk outlook.
Simplify Volt Robocar Disruption and Tech ETF (VCAR)
This actively managed ETF seeks notable exposure in the autonomous driving sector. It utilizes call options to enhance Tesla’s performance during major stock movements while also maintaining a tech index for diversification and hedging. Annual fees are set at 0.95%, with AUM currently at $5.2 million (read: 5 Tech ETFs at the Forefront of the Fed-Induced Rally).
ARK Autonomous Technology & Robotics ETF (ARKQ)
This actively managed ETF aims for long-term capital appreciation through companies at the forefront of technological advancements in various fields. Tesla leads the fund with an 11.9% share among the 37 holdings. The fund has an AUM of $785.3 million and charges 75 basis points per year.
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Tesla, Inc. (TSLA): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
