Tesla's Q1 Earnings Set for Disappointment Amid Declining Sales

Tesla is expected to report disappointing Q1 earnings with a consensus EPS of 45 cents, facing declining deliveries and increased operating expenses. Investors should prepare for potential stock volatility as these results are unveiled post-market on April 22.

Date: 16-04-2025

AI Rating: 4

Tesla is in a challenging position heading into its Q1 earnings report. The consensus estimate for earnings per share (EPS) is 45 cents, holding steady from the previous year yet reflecting a decline of 11 cents over the past month. A crucial factor affecting investor sentiment is Tesla's weak delivery numbers; the company reported 336,681 vehicles delivered, substantially lower than the anticipated 426,407 units and down from the previous quarter's 495,570. This decrease suggests underlying demand pressures that could negatively impact future revenues.

Tesla's revenue estimates also reveal some strain. While the anticipated revenue of $21.85 billion implies a modest year-over-year growth of 2.6%, the automotive sales are likely to be a significant drag. Expected revenues from automotive sales are pegged at $17.48 billion with a decline in gross margins to 15.8%, down from previous periods. The persistent need for discounts and incentives to stimulate sales may further reinforce concerns regarding profit margins and overall profitability.

On a more positive note, Tesla is showing substantial growth potential in its Energy Generation and Storage segment, expected to generate revenues of $2.1 billion, reflecting a remarkable 70% increase over the past year. This sector, driven by products like Megapack and Powerwall, could offset some negative impacts from declining automotive sales.

Given the rising operating expenses tied to factory retooling and capacity expansions, further strain on profit margins is anticipated. High capital expenditures could limit operational profits, necessitating rigorous scrutiny from investors when evaluating Tesla's financial health and growth prospects.

Overall, with an Earnings ESP of -11.7% and a Zacks Rank #5 indicating a strong sell, the outlook is not optimistic for an earnings beat this quarter. Investors should brace for potential volatility post-earnings announcement on April 22 as concerns around delivery numbers and profit margins weigh heavily on sentiment.

Stocks: TSLA QS LKQ BWA