Tesla (TSLA) Earnings Analysis - FA + TA

In every quarter, the key metrics for Tesla have been its production and delivery numbers, revenue growth, gross margin, operating income and non-GAAP diluted EPS.

Telsa has announced its production and delivery numbers on 02 Oct for the 3rd quarter 2023, production totaled 430,488 units and deliveries were 435,059 units. The delivery total marks a 6.7% decline from the prior quarter, when the EV maker handed over 466,140 units.

This could mean a soft financial results for Q3 with this lower-than-expected production and delivery numbers.

The price cuts exercise to retain market share has seen Telsa having their gross margins deteriorate. Tesla is able to deploy this price cuts strategy because of its strong margins historically compared to other makers.

This is something that investors are watching (gross margin) whether Tesla is able to maintain and retain the margin advantage and also the market share.

For Q2 2023, Tesla reported a disappointing operating margin of 9.6% despite record-high quarterly revenue.

The margin decline was due to lower average sales prices, costs related to production of the 4680 battery cells that Tesla designed and operating expenses associated with Cybertruck and AI initiatives.

Tesla still beat consensus estimate for earnings by $0.12 with adjusted EPS at $0.91 per share. I would expect estimate to be beaten but by smaller margins.

Tesla have given shareholders more than 100% year-to-date returns despite the miss on margins, but considering the competition in EV space particularly in largest market, China.

Telsa might not enjoy the same number of demands moving forward.

Even though Tesla have 20% of the global EV market share ending Q2 2023, this might change as we can see BYD is widening the lead away from Tesla in China (one of the largest market).

The battle for market share is particularly prominent in China, a country that is spearheading the transition accounting for 55% of global EV sales, closely followed by Europe, the second largest market.

What is somewhat concerning is that during H1 2023, BYD's vehicles accounted for the majority of EV sales at 21%, with Tesla following closely behind at 15%.

My recent trip to one of the more eco-friendly city in China where the number of EV cars on the roads is considerably higher, I have seen more BYD and only 1 Tesla out of 10 BYD.

Individual investors make up more than 55% of the shares ownership so investors sentiment is a concern on why Tesla stock price could be volatile.

We have seen on past incident where there might be good earnings showing, yet the share price tend to trade downwards.

This is what I have gathered, I believe the ongoing news development is more important for Tesla trading. It is important to keep yourself up to date on what is developing for Tesla.

As mentioned in the previous section, Tesla share price tend to move with its news development. Despite Tesla beating the consensus estimate for earnings for Q2 2023, its share price loses more than 9% before and after the earnings release.

This might be a signal where we need to watch how Tesla would be navigating its cost control efforts. This might be one of those.

Investors are also anticipating the news of the Cybertruck.

Tesla seem to be trading near the 50-day MA period as of 17 Oct, this might signal an upside move if we do have a better margin performance.

On top of the margin performance, we might have a slight improvement on its EPS estimate beat.

From ADX, Tesla ADX is below 20 which indicate a weak trend and -DI is above +DI suggesting a bearish downside.

Like I have mentioned earlier, Tesla investors might be deciding more on how news developing are moving so ADX might not be a good indicator on how Tesla trend and how its share price would move.

RSI is showing that traders and investors are not planning for any LONG or SHORT position as RSI is between 30 and 70.

We might need to watch out for any news for Cybertruck prior to its earnings release. The deliveries numbers are in and it is not very favorable.

Based on what I have gathered, Tesla is a growth-oriented company so the focus is on how much they have grown their operating margin. This is important as it will show how well have Tesla been on its cost control efforts.

One top of that Telsa also spent $172 million more on research and development costs in Q2 compared to previous quarter.

I will be focusing on the revenue, margins and EPS figure to see if Tesla have been able to navigate the competitive EV space.

Appreciate if you could share your thoughts in the comment section whether you think Tesla would go up if they miss margin but beat the EPS consensus estimate? In Q2 it went down instead.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.