Without question Tesla (TSLA) stock has been in overdrive for much of 2023. Its shares have skyrocketed 125% year to date, crushing the 17% rise in the S&P 500 index. Just as impressive, since reaching 52-week low of around $101, TSLA stock has risen almost three-fold, surging more than 180% to $284 on July 3.
But investors want to know how much higher can Tesla stock go? The luxury electric vehicle company is set to deliver its financial results for the second quarter fiscal 2023 on Wednesday after the closing bell. Tesla is benefiting from both record vehicle production and deliveries, growing its total Q2 deliveries by 83% year over year to 466,140 vehicles. Not only did Tesla’s Q2 delivery total crush analysts' estimates, it was the company’s largest delivery beat in almost two years.
There’s potentially more gains on the horizon. The company last month announced a deal with General Motors (GM) to allow drivers to use 12,000 Tesla superchargers via an adapter starting next year. Tesla's charging port, which is on the North American Charging Standard (NACS) connector, will work for GM electric vehicles starting in 2025. The partnership with GM follows a similar deal with Ford Motor (F). This new deal prompted Wedbush analyst Daniel Ives, a longtime Tesla bull, to tweet, "Game, set, match.”
Ives, who boosted his rating on the stock to Outperform, added "Musk playing chess while others playing checkers.” Later, he said, "Tesla just cornered the market," discussing the North American EV charging systems. While putting the company back on his Best Ideas list, Ives said, Wall Street will start to “better recognize the underlying value in the Tesla EV ecosystem into 2024 and beyond.” The analyst boosted his price target on Tesla stock to $300, up from $215.
The company has also gone through a series of price cuts which could impact not only revenue and profits, but also the guidance for the second half of fiscal 2023. Investors are curious to see the level of impact that the recent price cuts might have on Tesla's average revenue it recognized per vehicle. The company’s profit margin profile as well as customer deposits will be closely-watched. Given these factors, analysts will be keeping a close eye on Tesla's segment financials.
In the three months that ended June, Wall Street expects the Austin, Texas-based company to earn 81 cents per share on revenue of $24.53 billion. This compares to the year-ago quarter when earnings came to 76 cents per share on revenue of $16.93 billion. For the full year, ending in December, earnings are expected to decline 14% year over year $3.50 per share, while full-year revenue of $100.34 billion would rise 23.2% year over year.
As noted, in the most-recent quarter, the company Tesla produced 479,700 vehicles, delivering 466,140 which not only beat consensus estimates, but surged by a staggering 83% year over year. Tesla's recent price cuts are driving in new buyers, along with record vehicle registrations. But the cuts are expected to pressure both revenue and profit margins.
In Q1 the company missed on both he top and bottom lines, reporting adjusted EPS of 85 cents on revenue of $23.3 billion. The latter missed by $60 million. Q1 operating margin came in at 11.4% of revenue, down from last quarter's mark of 16.0%. Gross margin of 19.3% compared to 29.1% a year ago and 23.8%% sequentially.
The company’s ability to innovate and it’s awe inspiring cutting-edge technology has catapulted it to become the dominant player in electric vehicles market which it created. But for the stock to keep rising, on Wednesday investors will want to see whether Tesla can improve on these numbers amid recent price cuts.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Richard Saintvilus
After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.
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