Tesla investors will focus on demand issues in earnings report

October 18 (Reuters) – Tesla Inc () Wednesday’s quarterly report will likely show whether the electric vehicle maker, led by Elon Musk, is facing any weakness in demand that is starting to weigh on the broader auto industry.

Decades of high inflation, rising energy bills in Europe and signs of a weakening Chinese market have cast doubts among some analysts as to whether Tesla can handle an economic slowdown and continue raising prices without hurting its sales.

While Musk says Tesla “has no demand problem,” the company’s latest report on deliveries showed it made 22,000 more EVs than it delivered to customers in the third quarter. He attributed the increase in inventory to problems with transportation.

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CONTEXT

Local competitors of the EV manufacturer BYD (<002594.SZ>), Nio Inc (<9866) ile zorlu bir rekabetle karşı karşıya olduğu göz önüne alındığında, dünyanın en büyük otomobil pazarı olan Çin'deki Tesla araçlarına olan talep Wall Street analistleri arasında büyük bir endişe kaynağı olarak ortaya çıkıyor. .HK>) and XPeng Inc (<9868.HK>).

“At the moment, the biggest concern is demand in China as waiting times seem to be shrinking,” RBC Capital Markets said. Said. “The question is whether this is a sign or a sign of a larger shift among consumers.”

Globally, there are fears that auto sales could lose momentum in the coming quarters as rising interest rates and a weaker economic backdrop discourage consumers from buying the big ticket. Read more

Analysts say pricing is a key factor that could help Tesla compensate for a possible drop in demand and increase revenue. Read more

Reuters Charts

The average US selling price of Tesla’s Model 3 has risen nearly 24% since January last year, potentially helping the EV maker record record revenue in the third quarter.

Wells Fargo said Tesla is probably the biggest beneficiary of the Biden administration’s new consumer tax credits that encourage North American battery and EV production.

Musk also raised hopes for a share buyback when he said “Noted” on Twitter in response to a stock buyback call from a major individual investor earlier this month.

Such a move could benefit Musk, whose 15% stake in Tesla makes him its largest shareholder, and Twitter Inc.) can help raise cash to fund its $44 billion deal to go private.

Some experts say Musk may need to sell an additional $3 billion in shares after the earnings announcement to help fund the deal.

“If there’s a big sale of Tesla stock by Musk after the earnings, it will be a strong sign that the Twitter deal is on the verge of closing,” said Adam Badawi, a law professor at UC Berkeley.

BASIC KNOWLEDGE

* Analysts expect Tesla’s third-quarter revenue to rise nearly 60% to $21.96 billion, earning $1 per share when it reported results in October. 19 – Refinitiv Data

WALL STREET SHARE

* Out of 43 analysts covering the company, 27 rated the stock as “buy” or higher, 10 as “hold” and six as “sell” or lower

* Median price target of $325, up 14% since early 2022

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Akash Sriram in Bengaluru and Hyunjoo Jin in San Francisco; Edited by Anil D’Silva

Our Standards: Thomson Reuters Trust Principles.

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