Does Elon Musk Have a Game Plan for Tesla Stock? 5 Things to Watch Ahead of TSLA’s Q4 Earnings.

Tesla (TSLA) is set to release its fourth-quarter earnings on Jan. 29 after the close of markets. The earnings will be a reality check for TSLA stock which rallied sharply since the November presidential election. The first crack in the surface appeared earlier this year when its 2024 deliveries fell short of expectations. It reported a year-over-year fall in deliveries – a first for the company. The Q4 earnings release will also test Tesla stock’s rally after shares have doubled over the past 52 weeks.

www.barchart.com

Tesla Q4 Earnings Prediction

Analysts expect Tesla’s Q4 revenues to rise 7.8% year-over-year, while its earnings per share (EPS) is projected to rise by around 12.8% to $0.64. However, in the full-year, Tesla’s profits are expected to tank by over 20% to $2.48, which would mark a second consecutive year when the electric vehicle giant posts an over-20% yearly fall in profits.

The brutal EV price war took a toll on Tesla’s margins, as the company slashed vehicle prices to boost deliveries.  

What to Watch in Tesla’s Q4 2024 Earnings Call

Along with key financial metrics, I will watch out for the following during Tesla’s Q4 earnings call:

• 2025 Delivery Guidance: During the Q3 earnings call, CEO Elon Musk said that Tesla’s deliveries could grow by as much as 30% in 2025. I will watch out for any updates on that guidance as the company could not deliver on its 2024 guidance of growing deliveries.
• Update on the Low-Cost Model: Tesla might also provide an update on its low-cost model, deliveries of which are expected to commence sometime this year. On a similar note, the company might also provide a brief overview of the recent Model Y refresh.
• New Plants: Tesla’s upcoming plant in Mexico has been on hold. During the Q4 earnings call, the company might discuss its plans for future plants. I am especially interested in hearing whether Tesla would consider buying production plants from other EV companies, many of which are going bankrupt and might be selling assets at fire-sale prices.
• Full Self-Driving Timeline: While Tesla and Musk are not known for meeting their ambitious timelines, no other product has lagged as much as full self-driving (FSD). The company has missed multiple self-imposed deadlines to reach full autonomy. Incidentally, Tesla stock rallied following Donald Trump’s election in hopes of a more favorable policy environment toward self-driving cars. During the upcoming earnings call, question of autonomy and the regulatory environment might also come up. The company might discuss the launch timeline of its ride-hailing service.
• Musk’s Time Commitments: Musk is associated with several other companies including X (formerly Twitter), SpaceX, and xAI. Many investors have been apprehensive about whether Musk is spending enough time at Tesla. Musk now also heads the Department of Government Efficiency, and the question about him balancing his different commitments might pop up during Tesla’s Q4 earnings call.

TSLA Stock Forecast

Tesla is the proverbial “love it, hate it, but you can’t ignore it” kind of story for sell-side analysts, and the same is reflected in the stock’s ratings. Of the 38 analysts covering TSLA, 14 have a “Buy” or higher rating while 10 rate the stock as a “Strong Sell.” The dichotomy is also visible in the stock’s target price. Tesla’s Street-low and Street-high target prices are $120 and $515, respectively. It is quite unusual to see such divergence in target prices – especially if it’s a company of Tesla’s size. 

Analysts are mixed on Tesla heading into the Q4 confessional, and while Piper Sandler reiterated it as its top idea while raising the target price from $300 to $515, Wells Fargo predicts the stock will fall to $125 as it sees the company’s fundamentals deteriorating. While Tesla bulls see upcoming products like the Cybercab and Optimus humanoid as adding significant value, those in the bearish camp are not too sold on these opportunities – especially in light of the company’s mammoth valuation.

www.barchart.com

Tesla Might Need to Justify Its Rally

While a favorable policy environment under the Trump administration is a positive for Tesla, the company faces headwinds in the short term. Firstly, surveys have shown that Musk is growing unpopular to the extent that many customers say they regret buying a Tesla car and want to sell their vehicles.

Tesla might also find itself in the trade war crossfire and could be targeted by countries that face Trump’s tariff ire. Moreover, if Trump goes ahead with diluting EV-friendly policies, it would be negative for the industry. While Tesla has the financial muscle to withstand any adverse policies, it would be negatively impacted in the short term.

Overall, Musk might need to do some some heavy lifting during the upcoming earnings call to justify the recent stock rally.