Tesla (NASDAQ:TSLA) investors are clearly a little skittish ahead of the Q1 earnings due to release after the US market closes today (22 April). The stock fell almost 6% yesterday, although over a wider time horizon it’s still up 60% in the last year. The earnings today will be key for the direction of the stock for coming weeks. Here’s what I’m watching out for.
Finances
Of course, some of the focus will be on the cold hard numbers. Analysts expect a modest 1% rise in revenue versus the same quarter last year, with a 6% fall in profits. Some of these underwhelming statistics have already been factored into the share price. Part of the drop in recent days has come as investors have tried to set realistic expectations for the earnings report.
Further, we’ve already had the Q1 delivery numbers. Earlier in April, data showed that Tesla had Q1 vehicle deliveries of 336,681. This was a 13% decrease from last year and below expectations. So this naturally leads some to assume that profit for the quarter will be lower.
However, this doesn’t mean that Tesla shares will fall after the results are released. If it manages to beat the lowered bar of forecasts, the optimism could cause a sharp rally in the stock.
Future projects
In my opinion, Tesla’s long-term value is increasingly tied to its AI/autonomous tech roadmap, not just cars. So with the earnings report, I’d be looking for progress around adoption rates with the self-driving cars and new software capabilities. Any meaningful advancement or production targets for the Optimus robot would also be great.
Such comments could cushion any fall in Tesla stock even if the financial results aren’t great. Some investors will be happy to look beyond the quarterly numbers if the vision for the coming years looks bright.
Tariff risks
Finally, investors will want some reassurance regarding the negative impact of President Trump’s planned tariffs. China is the largest EV market globally, so Tesla will want to try to be competitive in this space. Further, supply chain disruption with car components could hamper the domestic supply.
If the business can manoeuvre things to minimise any issues here, it could help to provide a rally in the stock. However, if the outlook is gloomy, it could have the opposite effect. Tariffs indeed present a risk to many companies, not just Tesla. Yet given the role of Elon Musk and his ties to the President, Tesla is really one of the corporate figureheads when it comes to this trade war.
Even though I’m a long-term investor, I’ll keenly watch the initial reaction to the earnings. It’ll provide a good sentiment check on market sentiment. Although I’m not looking to buy right now, a continued move lower would make it more appealing for me to consider in coming months.
