[Earnings Preview] Tesla's Q3 financial results have arrived! Will the stock price turn positive due to good performance after the disappointing sale of “Robo Taxi”?

Tesla, the major US EV companyFinancial results for the fiscal year ending 2024/7/9 (3rd quarter) will be announced at 5 o'clock on 10/24 (Thursday) Japan time. The “Robo Taxi” announcement event led to disappointing sales for investors, and the company's stock fell nearly 16% this month.
After the RoboTaxi announcement, Barclays analysts stated that “Tesla's focus has returned to fundamentals, at least for now,” and investors should pay attention to the company's sales outlook and profit margin recovery. Analysts led by Dan Levy wrote in a memo for customers on the 16th that “considering that earnings forecasts for the 3rd quarter exceed expectations and that the short-term outlook is stable, I think there is a possibility that it will be a positive trigger in the short term.”

Automotive Division Achievements
Tesla's total sales increased 2.3% from the same period last year to 25.5 billion dollars in the Q2 financial results, which is an important source of revenueSales in the automotive sector fell 7% from the same period last year to 19.8 billion 78 million dollarsIt was. Of the same departmentGross profit margin fell to 18%, down 20% from the same period last yearIt became.

It was announced on the 2nd of this monthWorldwide car deliveries for the July-9 fiscal year increased 6.4% from the same period last year to 0.46 million2890 unitsIt was. It fell slightly below market expectations, but turned positive growth for the first time this year on a quarterly basis. In addition to strong performance in China for the July-9 fiscal year, sales were driven by the fact that loans were provided to counter the effects of high global interest rates.

As can be seen from the chart above, growth in the number of car deliveries has slowed since the fourth quarter of 2022. Despite price cuts many times due to falling demand and price wars, sales have not increased that much. It is a situation where profits in the automobile sector are shrinking further due to price cuts.

Sachs analysts are Tesla's third-quarter automotive divisionSales are expected to increase 13.1% from the same period last year to 22.1 billion 90 million dollarsHowever, high production costs and price competition continued to put pressure on profit margins,The gross profit margin was almost unchanged from the second quarter, down 40% from the same period last year to 18.3%I anticipate that it will be.

At the financial results briefing for the previous quarter, Elon Musk, Chief Executive Officer (CEO)Discounts on electric cars are putting Tesla in a difficult situation, but that is a short-term problemHe said he thought so. The company, which plans to offer cheaper models in the first half of next year, is now rushing to cut costs.

Will the energy business continue to grow?
Tesla's Q2 energy generation and storage business introduced 9.4 GWh of energy due to rising demand for powerwalls and megapacks. Sales doubled from the same period last year to 3 billion 14 million dollars, which was a big surprise for the second quarter results.

Tesla's energy storage installation volume in the third quarter reached 6.9 GWh, an increase of 73.3% over the same period last year, andRevenue reaches 2.1 billion 70 million dollars, up 39.1% from the same period last yearWall Street analysts are predicting that.

Sachs analysts have stated that the company's energy business is on a strong growth trajectory and will be the business that boasts the company's highest profit margin. Meanwhile, as management stated that energy adoption tends to be unstable, HSBC warns that there is a possibility that performance will fall far short of Wall Street's expectations.

Where is the future of “robo-taxis”?
Chief Executive Officer Elon Musk (CEO) has clearly stated the idea of placing the autonomous driving taxi “robo-taxi” at the core of the long-term strategy. However, although the presentation event that the market had been waiting for was glamorous as a show, it is accepted that the content was weak from a business point of view. Details of the short-term product roadmap were not shown, and “mass production commencement time is subject to regulatory approval,” and the fact that information related to the expected low price model “Model 2” was not touched upon led to disappointing sales among investors.

Compared to rivals that are involved in the development of autonomous driving taxis, Tesla's advantage lies in being able to collect and utilize large amounts of driving data from millions of in-house EVs. In all driving scenarios, Tesla can improve autonomous driving technology by utilizing large amounts of driving data. This will ultimately be the real differentiator.

In the long run, Tesla is finally on the next growth trajectory, but investors will have to wait a few years before it is directly linked to the company's growth and profits. Meanwhile, investors should focus on progress in other growth sectors, such as the company's energy storage.