We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tesla Announces Further Price Cuts Ahead of Q1 Earnings: What's in Store?
Read MoreHide Full Article
Tesla (TSLA - Free Report) is set to announce its first-quarter earnings results after the bell on Wednesday, as the stock dropped -3% in early trading ahead of the widely anticipated report. The EV giant slashed prices once again on Tuesday night following a reduction of U.S. federal EV tax credits on several of its vehicles. Tesla Model Y prices were cut by $3,000 and now start at under $47k, while the Model 3 starting price was cut by $2,000 to start at just under $40k.
The move marked Tesla’s sixth price cut this year and coincides other aggressive cuts abroad. Tesla has now lowered the price of the base Model Y by 20% this year alone, while the base Model 3 price has been lowered by 11%. As the EV/AI race continues to gain steam, CEO Elon Musk has attempted to stay a step ahead of the competition.
The decisive strategy appears to have paid off thus far. Tesla reported record Q1 deliveries earlier in April, rising 36% to 422,875 versus the same quarter in the prior year. The figure was also 4% above the latest Q4 record of 405,278 deliveries. A ramp-up in production at the Berlin and Austin gigafactories – along with the introduction of new Semi and Cybertruck models – should support future deliveries growth.
In my mind, while the price cuts will frustrate past buyers, they will lure prospect buyers and help maintain Tesla’s EV dominance. Musk has also stated that he’d like to get prices down for the current lineup ahead of its next-generation vehicle.
Analysts have been eagerly awaiting the Q1 report to get a glimpse of how Tesla’s price-reduction strategy will impact profit margins. Earnings estimates for the quarter have dropped 2.33% in the past 60 days. The Zacks Consensus Estimate stands at $0.84/share, reflecting a drop of -21.5% relative to last year’s first quarter. Sales are anticipated to have risen 25.15% to $23.47 billion.
TSLA, a Zacks Rank #3 (Hold), has exceeded earnings estimates in each of the past four quarters, with an average earnings surprise of 23.55% during that timeframe.
Tesla is part of the Zacks Automotive – Domestic industry group, which has steadily outperformed the market this year:
Image Source: Zacks Investment Research
Also note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
The stock is ranked favorably by our Zacks Style Scores, with an ‘A’ rating in our Growth category and a ‘B’ in our Momentum category. The healthy scores indicate potential upside ahead based on promising sales and earnings growth as well as positive momentum.
Outside of Tesla’s main EV product offering, the company’s energy generation and storage revenue outlook is promising. The positive reception of the Megapack and Powerwall products have seen energy and storage developments rise at a 47% CAGR between 2020-2022.
Make sure to keep an eye on TSLA’s Q1 earnings release slated for after the bell today.
Disclosure: TSLA is a current holding in the Headline Trader portfolio in addition to the author’s portfolio.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Tesla Announces Further Price Cuts Ahead of Q1 Earnings: What's in Store?
Tesla (TSLA - Free Report) is set to announce its first-quarter earnings results after the bell on Wednesday, as the stock dropped -3% in early trading ahead of the widely anticipated report. The EV giant slashed prices once again on Tuesday night following a reduction of U.S. federal EV tax credits on several of its vehicles. Tesla Model Y prices were cut by $3,000 and now start at under $47k, while the Model 3 starting price was cut by $2,000 to start at just under $40k.
The move marked Tesla’s sixth price cut this year and coincides other aggressive cuts abroad. Tesla has now lowered the price of the base Model Y by 20% this year alone, while the base Model 3 price has been lowered by 11%. As the EV/AI race continues to gain steam, CEO Elon Musk has attempted to stay a step ahead of the competition.
The decisive strategy appears to have paid off thus far. Tesla reported record Q1 deliveries earlier in April, rising 36% to 422,875 versus the same quarter in the prior year. The figure was also 4% above the latest Q4 record of 405,278 deliveries. A ramp-up in production at the Berlin and Austin gigafactories – along with the introduction of new Semi and Cybertruck models – should support future deliveries growth.
In my mind, while the price cuts will frustrate past buyers, they will lure prospect buyers and help maintain Tesla’s EV dominance. Musk has also stated that he’d like to get prices down for the current lineup ahead of its next-generation vehicle.
Analysts have been eagerly awaiting the Q1 report to get a glimpse of how Tesla’s price-reduction strategy will impact profit margins. Earnings estimates for the quarter have dropped 2.33% in the past 60 days. The Zacks Consensus Estimate stands at $0.84/share, reflecting a drop of -21.5% relative to last year’s first quarter. Sales are anticipated to have risen 25.15% to $23.47 billion.
TSLA, a Zacks Rank #3 (Hold), has exceeded earnings estimates in each of the past four quarters, with an average earnings surprise of 23.55% during that timeframe.
Tesla is part of the Zacks Automotive – Domestic industry group, which has steadily outperformed the market this year:
Image Source: Zacks Investment Research
Also note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
The stock is ranked favorably by our Zacks Style Scores, with an ‘A’ rating in our Growth category and a ‘B’ in our Momentum category. The healthy scores indicate potential upside ahead based on promising sales and earnings growth as well as positive momentum.
Outside of Tesla’s main EV product offering, the company’s energy generation and storage revenue outlook is promising. The positive reception of the Megapack and Powerwall products have seen energy and storage developments rise at a 47% CAGR between 2020-2022.
Make sure to keep an eye on TSLA’s Q1 earnings release slated for after the bell today.
Disclosure: TSLA is a current holding in the Headline Trader portfolio in addition to the author’s portfolio.