Major EV Stock Prepares for Q2 Earnings: What You Need to Know

Key Points

• Tesla (NASDAQ: TSLA) will report its second-quarter earnings on Tuesday, following a robust rally fueled by better-than-expected delivery numbers.
• Tesla's stock has rebounded from being one of the worst performers in the S&P 500 earlier this year to now down just 3.7% YTD.
• Analysts estimate Q2 2024 revenue at $24.93 billion and EPS at 50 cents, with a consensus Hold rating based on thirty-four analyst ratings.

Tesla NASDAQ: TSLA will report its second-quarter earnings after the bell on Tuesday amid a robust rally fueled by better-than-expected quarterly delivery numbers. In the second quarter, Tesla delivered 443,956 electric vehicles, surpassing the analysts' estimate of 439,302. Although this was nearly 5% lower than the 466,140 vehicles delivered a year ago, the delivery numbers were well ahead of the first quarter’s 386,810, boosting Tesla shares. 

Earlier this year, Tesla was one of the worst performers in the S&P 500, with the stock plummeting almost 40% at one point. However, it has rebounded significantly and is now down just 3.7%, driven by a solid start to the year's second half, with its stock up nearly 30% for the month. And just ahead of its Q2 earnings, the stock is now consolidating above its rising moving averages, near a significant resistance zone of $260, which acts as a potential breakout level. However, its upcoming earnings report will decide the next directional move in Tesla.

Understanding Analyst Projections for Tesla

For the second quarter of 2024, analysts anticipate Tesla to report revenue of $24.93 billion, a significant increase from the $21.3 billion recorded in the first quarter. Despite this growth, the expected revenue matches the amount reported in the second quarter of 2023. Analysts project diluted earnings per share (EPS) to reach 50 cents, up from 34 cents in the previous quarter but down from the 78 cents reported a year ago. Additionally, net income is estimated to be $1.73 billion, showing an improvement from the $1.13 billion in the first quarter but a decline compared to the $2.7 billion reported in the previous year's second quarter.

Ahead of its earnings report, Tesla has a consensus Hold rating based on 34 analyst ratings. Seven analysts have issued a Sell rating, 15 have given a Hold rating, and 12 have assigned a Buy rating. The consensus price target of $203.03 suggests a potential downside of approximately 15% from its current trading levels.

Tesla's revenue is primarily generated from automotive and energy generation and storage segments. The bulk of its income comes from automotive sales and services. So, let’s take a closer look at each segment to gain further insight ahead of its upcoming earnings. 

Challenges and Recovery: Tesla's Automotive Sales Outlook

In Q1 2024, Tesla’s automotive revenue dropped 13% year-over-year to $17.4 billion, driven by a 9% decline in deliveries and lower average selling prices. This decline contributed to a 9% fall in total revenues, which stood at $21.3 billion. The company attributed the decrease to factors such as seasonality, macroeconomic challenges, factory shutdowns in Germany, and supply chain disruptions. 

However, Tesla projected a better performance in the second quarter. With an increase in deliveries in Q2, there is potential for revenue growth compared to Q1, although a year-over-year decline is still possible.

High-Margin Growth: Tesla's Energy Segment

Tesla's energy segment, benefiting from strong demand amid the artificial intelligence boom, made up 7% of its Q1 revenues. This business reported record profit margins of 24.6%, with energy storage deployments, especially the Megapack, hitting an all-time high in Q1. The Megapack, Tesla’s energy storage solution for commercial, industrial, utility, and energy generation customers, saw storage deployments rise to a record 9.4 GWh (gigawatt-hour) in Q2, more than doubling from the previous quarter. With gross margins above 20% for the past three quarters, this high-margin segment is poised to be a significant growth driver for Tesla. 

Tesla's Leadership in the EV Market

Tesla's energy generation and storage business, highlighted by the high-margin Megapack, is projected to grow by at least 75% in 2024. Opening its Supercharger network to other EVs could significantly boost revenue. Additionally, Tesla's vehicle autonomy and robotics advancements, including the Optimus robot, showcase its innovative potential. Despite CEO Elon Musk's controversies, Tesla remains a leader in the EV market, with the Model Y being the world's best-selling car in 2023 and leading innovative efforts in several other industries.