. Tesla Stock Earnings and Forecast: TSLA Drops 7.5% Due to Revenue

Tesla Stock Earnings and Forecast: TSLA Drops 7.5% Due to Revenue Miss and Lower Margin

Tesla Stock Earnings and Forecast: TSLA Drops 7.5% Due to Revenue Miss and Lower Margin

20 Apr 2023

  • Tesla’s first-quarter revenue fell short of forecasts.
  • TSLA decreases 6.5% on Thursday morning.
  • Due to price reductions in Q1, margins decreased.
  • More price reductions are also being thought about.

Elon Musk, the CEO of Tesla, stated he was okay with further price reduction for the electric manufacturer over the remainder of 2023, which caused the stock to decline after hours on Wednesday and in Thursdays premarket. Tesla missed sales expectations by $60 million. Even while adjusted EPS of $0.85 nevertheless met expectations, the market was not placated. At $167, the stock is currently trading 7.5% lower.

The first quarter saw a $23.3 billion increase in revenue year over year.

Tesla stock news: An EV price war is imminent

In the first quarter, Tesla drastically reduced the prices of its entire line-up, resulting in a drop in automotive gross margin to 19%. Musk and CFO Zachary Kirk horn had previously agreed, during the company’s Q4 earnings call in January, that a 20% gross margin was the projected figure for 2023. Since this was already significantly lower than the 29% level from the previous year, the market negatively evaluated the company’s failure to maintain the 20% target.

On Wednesday night’s earnings call, Musk stated, “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin.” In the most recent quarter, operating margin decreased to 11.4%, and Musk made it plain that further price reductions are likely. Tesla managed to keep its operating margin at 16% in the preceding quarter.

Tesla nevertheless had a GAAP profit of $2.5 billion and an adjusted profit of $2.9 billion. But the $441 million in free cash flow decreased 80% year over year. Along with the price reductions, Tesla executives blamed the quarter’s lower operating margins on rising material, commodity, and warranty expenses. As Tesla proceeded to expand its manufacturing in Texas and Austin, Capex increased from the fourth quarter. 

In the first quarter, the considerably smaller solar panel business that was acquired from Solar City witnessed a 40% YoY growth in deployment at 67 MW. Additionally, the storage sector saw an astounding 360% YoY increase to 3,889 MWh.

Tesla stock prediction

To determine the future direction of Tesla stock, refer to the weekly chart below. Thursday’s premarket saw TSLA trade all the way down to $167.61. In August and November of 2020, that level served as opposition, while in the first half of 2021, it served as support. In both March and January of this year, it has served as support. Further help is located at $153 below. As the stock increased 100% through February of this year before declining, it wouldn’t be shocking to see TSLA stock move down to either support during the coming month. Once TSLA breaks back over $214, the current consolidation phase will be over.