Tesla Inc. (TSLA) is in the spotlight this Monday morning as the electric vehicle manufacturer is set to share its third-quarter earnings results on Wednesday, October 23. The stock is moving a bit lower today, making it an 11% loss over the past month.
Now that we’ve officially seen the Robotaxi rollout, the market will be far more tuned in to profit and demand. The consensus estimate on Wall Street is calling for earnings per share of 59 cents with sales of $25.4 billion.
For comparison, the EV maker reported 66 cents per share on just $23.4 billion in sales this time last year. But we already know that deliveries have improved for Q3, as Tesla disclosed those figures earlier. The company sent out 463,000 cars compared to 435,000 in Q3 2023.
Looking back to the second quarter of 2024, Tesla earned 52 cents per share on just $25.5 billion – both of which were below the consensus, which called for earnings per share of 61 cents on $24.5 billion in sales.
We wrote a few weeks back on the hype surrounding Tesla’s Robotaxi event. Unfortunately, investors were left a bit underwhelmed as the stock fell more than 11% afterward.
It seems there wasn’t enough detail about how the company will make its vision for self-driving cars a reality. Massive strides need to be made in its driver assistance software before the Robotaxi rollout can begin.
What matters most going into the earnings day is how the company expects to improve profits. The company has been burdened by stagnant sales growth, weak margins on Cybertrucks, and increased incentives.
Looking back at Q3 last year operating profit margins fell at 7.6% – but in Q2 of this year, that figure slipped to only 6.3%. The Wall Street expectation is for 8% or better.
Alongside profitability improvements, the market is hoping to hear that demand is heating up for EVs as it has gone fairly cold. While demand has stabilized here in the States, the Chinese market is still ripe with opportunity.
TSLA has now fallen more than 12% through 2024 thus far, and the earnings results on Wednesday hold huge implications for the stock. In the meantime, should you bolster your position and buy TSLA – or, is time to cut losses on this stock?
We’ve taken a look in the VectorVest stock software and actually see 3 reasons to HOLD your position on TSLA right now. Here’s what you need to know…
TSLA Has Very Poor Upside Potential With Good Safety and Fair Timing
The VectorVest system saves you time and stress while empowering you to win more trades with less work. It delivers clear, actionable insights in just 3 simple ratings - relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. Better yet, you get a buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. Here’s what we uncovered for TSLA:
- Very Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. This makes it a far superior indicator than the typical comparison of price to value alone. TSLA has a very poor RV rating of 0.22 right now. The stock is overvalued, with a current value of $42.59.
- Good Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 1.20 is good for TSLA.
- Fair Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. The RT rating of 0.85 is a ways below the average for TSLA but deemed fair nonetheless.
The overall VST rating of 0.88 is considered fair for TSLA, albeit below the average. The stock is still rated a HOLD ahead of Q3 earnings later on this week.
But if you’re a current TSLA investor or are waiting for the right opportunity to trade this stock, there’s more to this story that you need to see. Get a free stock analysis today and set yourself up for success.
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VectorVest advocates buying safe, undervalued stocks, rising in price. TSLA has been trickling lower over the past few weeks after the Robotaxi event was a bit disappointing. Now, the company will need to show promising Q3 earnings results, with profitability and demand in the spotlight. The stock itself has very poor upside potential, good safety, and fair timing right now.
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