So much’s at stake for Tesla this week.
The EV big is slated to drop its Q3 outcomes on Wednesday, Oct. 22, with the decision prone to reset expectations for each its automotive enterprise and the bigger-than-cars story buyers are betting on.
Many would argue, although, that the bigger current story hasn’t been the quarter. It’s Elon Musk’s $1 trillion pay plan and a possible xAI tie-up that would pull Tesla quite a bit deeper into the AI arms race. Traders appear to be circling the identical questions:
- $1 trillion package deal, key date: A shareholder vote is slated for November 6, with Musk’s package deal framed round multi-year AI/AV execution and valuation hurdles; it additionally follows Musk’s current $1 billion open-market Tesla inventory buy.
- Milestone focus: Targets have been set for the Robotaxi rollout and Optimus ramp, successfully holding compensation linked to concrete AI deliverables, not simply car gross sales.
- xAI tie-up choices: Wall Avenue is monitoring Tesla’s fairness stake in xAI or a full merger sign, with nearer-term potentialities together with IP/licensing, shared compute, and stronger information integration.
If that each one appears like much more than a single quarter at this level, there’s one voice price listening to as the amount rises.
Dan Levy is a veteran autos analyst at Barclays who has steadily coated Tesla and the worldwide autos house.
It is why his sharp take heading into the Q3 earnings print is as pertinent as ever.
Tesla’s cut up story will get sharper earlier than earnings
Tesla’s newest inventory market rally has Wall Avenue divided once more, and Barclays analyst Dan Levy is spelling out why.
Heading into Oct. 22’s pivotal Q3 earnings, Levy says buyers are confronted with “two contrasting tales.”
On one facet, there’s the extremely potent AI and autonomous-driving narrative that’s been reinvigorated by Elon Musk’s proposed $1 trillion compensation package deal.
Then again, there’s Tesla’s slowing fundamentals, with Q3 deliveries possible the height for now after consumers rushed in to beat the Sept. 30 expiration of the $7,500 EV tax credit score.
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It’s necessary to notice that Tesla inventory has surged over 30% since early September, leaping again into trillion-dollar territory. Nevertheless, Levy argues that the newest bump has been led extra by AI optimism than by near-term enterprise energy.
“Fundamentals don’t matter… till they matter,” he warned, stating Tesla’s automotive earnings fund its “very cash-intensive” robotaxi and AI ambitions.
Levy retains an Equal-Weight (Impartial) ranking, whilst he lifts his value goal to $350, which is sort of 20% under the place the inventory at present trades.
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Moreover, Wedbush’s Dan Ives, maybe Tesla’s most carefully adopted analyst, has the same take heading into earnings week.
In a publish on X, Ives mentioned Robotaxi growth, Cybercab manufacturing, and Musk’s xAI funding stay the “main focuses” on the decision.
He feels Musk’s new pay package deal will successfully sail by way of shareholder approval, hailing it as a “key inexperienced mild” for Tesla’s subsequent AI chapter. Ives additionally talked in regards to the potential for deeper integration between Tesla and xAI, pointing to a possible merger or fairness stake.
Fast takeaways:
- Two tales, one inventory: Barclays’ Dan Levy feels Tesla’s Q3 is contingent on AI hype versus fading fundamentals.
- Large bets forward: Musk’s $1 trillion pay plan and xAI tie-up at present dominate the analyst chatter earlier than earnings.
- Momentum verify: Shares are up 30% since September, however each Levy and Ives warn the rally’s principally constructed on religion, not money circulate.
Q3 earnings on deck: the numbers to beat
Tesla will report its Q3 earnings on Wednesday, October 22, after the bell, with the webcast beginning at 5:30 p.m. EST.
Here is what buyers will probably be trying to assess: Does the quarter present that Tesla’s document supply streak is constructed round lasting demand, or short-term pull-forward?
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Wall Avenue expects EPS between $0.52 and $0.55 on $26.27 to $26.45 billion in gross sales, a sizeable 24% to 27% drop in revenue yr over yr, however 4% to five% gross sales development with quantity offsetting weaker pricing.
Fueling that setup is a document 497,099 deliveries, racing forward of the 440,000 consensus. The beat principally got here as U.S. consumers appeared to lock within the $7,500 EV tax credit score earlier than it expired September 30.
Nonetheless, the manufacturing–supply hole reveals whether or not stock piled up late within the quarter. Regional combine additionally issues, as U.S. energy possible masked pricing strain in Europe amid intense competitors in China.
Tesla didn’t concern detailed quarterly steering, however in Q2, administration reaffirmed its give attention to capex-efficient growth, liquidity energy, and a shift towards AI and software-led earnings.
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