Tesla Q1 2025 Preview: Earnings Pressure and Strategic Queries

Tesla is set to report its Q1 2025 earnings on April 22, but missing delivery expectations and a decline in EPS estimates raise concerns. Investors seek insights on strategic initiatives amid declining stock performance.

Date: 18-04-2025

AI Rating: 5

Upcoming Earnings Report
Tesla is scheduled to release its first-quarter 2025 results on April 22. Expectations are low, with a consensus estimate of 45 cents per share in earnings, marking no change from the same quarter last year. This could cause additional pressure if results disappoint, particularly as the earnings estimate has been revised downward recently.

Tesla's revenues are anticipated at $21.85 billion, reflecting a modest year-over-year increase of 2.6%. Despite this, there's concern over the broader performance, especially given that in the previous four quarters, it has missed EPS estimates three times, drawing attention to its average earnings surprise of just 0.8%.

Declining Deliveries and EPS Issues
The reported quarter saw Tesla produce 362,615 vehicles but delivered only 336,681. This underwhelming delivery count not only missed expectations but also represented a significant drop of 32% sequentially. Such performances heighten the risk of lower profit margins, which might drop from 17.8% to 15.8% year-over-year.

The report mentions that Tesla's net income and EPS figures are under scrutiny, with an estimated revenue of $104.8 billion for 2025, reflecting a growth of 7.3%, and a projected EPS of $2.64, a potential increase of around 9%. The stock's performance is particularly concerning, having underperformed its industry and the broader market, suggesting bearish sentiment surrounding TSLA.

Valuation Concerns
Tesla's current price-to-sales ratio of 7.04 stands starkly high compared to its industry average of 2.18, raising concerns about its valuation. Such metrics suggest that despite high growth prospects in electric vehicles, investors might question the sustainability of the growth against the backdrop of increasing competition and declining brand perception attributed to management's recent endeavors.

The combination of lower deliveries, potential missed EPS marks, and the high valuation make Tesla a focus for professional investors leading up to this earnings call. Without clarity on its strategic initiatives and improvements in delivery performance, the stock may continue to face pressure in the near term.

Stocks: TSLA GM F