Tesla Q3 earnings preview: It’s all about demand

FREMONT, CALIFORNIA - APRIL 20: A sign is posted in front of a Tesla Service Center on April 20, 2022 in Fremont, California.

FREMONT, CALIFORNIA – APRIL 20: A sign is posted in front of a Tesla Service Center on April 20, 2022 in Fremont, California.

It will be another big quarter for Tesla (TSLA) and the markets at large when the EV giant reports Q3 results after the market close on Wednesday.

Wall Street awaits a report from Tesla:

That revenue figure would represent a jump of more than $5 billion from the second quarter, which saw Tesla experience COVID-related and operational shutdowns in Shanghai. Year over year, that estimated revenue number would be up almost 61% from the third quarter of 2021.

On the profitability side, Tesla is expected to report adjusted net income and EBITDA numbers higher than one year and higher than sequential.

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Ahead of the earnings release, investors and analysts will be focused on any clues to the demand story for Tesla, which some are concerned is cooling amid a Fed-induced economic slowdown.

“While we believe that demand for Tesla products is exceeding supply, it would be unreasonable to assume that there is (a) a limit to how much Tesla can continue to raise prices without impacting demand, and (b ) that the company was not exposed to a macroeconomic slowdown growth,” Morgan Stanley’s Adam Jonas said in a note to investors two weeks ago.

“A key concern right now is demand in China as wait times appear to be shrinking,” RBC Capital Markets said in a statement. “The question is whether this is an outlier or a sign of a larger shift in consumers.”

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Of course, Tesla’s production prospects will also come under scrutiny, with analysts watching for a change to Tesla’s 50% CAGR (compound annual growth rate) target. The ramp-ups in Giga Berlin and Austin will also be on the forefront, as well as whether Giga Shanghai is fully back from its last hiatus due to operational improvements.

On the product side, CEO Elon Musk and the team are expected to share more information on the launch of the Tesla Semi, which Musk said will begin shipping to Pepsi in early September, and whether there will be more updates to the Tesla The Cybertruck’s industrialization process and its future product roadmap.

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For others on the street, to halt the free fall in Tesla stock, the company needs to outline a realistic growth plan, with analysts like Wedbush’s Dan Ives saying they’re “laser focused” on their strategy to get there.

“For Musk, the street clock has struck midnight to stop the excuses and the noise…Now is the time to execute on sensible growth and unit targets into Q4 2023 and it starts with tomorrow’s conference call,” Ives wrote in a note this morning.

Pras Subramanian is a reporter for Yahoo Finance. you can follow him Twitter and further Instagram.

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