Tesla (NASDAQ:TSLA) will release its Q1 2024 financial results on Tuesday, April 23. Ahead of the Q1 print, the electric vehicle (EV) giant lowered the price of its cars across key markets to boost volume. Down about 41% year-to-date, Tesla is one of the worst-performing S&P 500 (SPX) stocks this year. Meanwhile, analysts expect its Q1 sales and earnings to decline, implying that its stock could remain under pressure.
Let’s dig deeper to understand what’s ahead for Tesla shareholders.
Tesla Cuts Prices of Vehicles
Tesla has cut the prices of its vehicles in its major markets, including Germany and China. This comes after it lowered the prices of its cars by $2,000 in the U.S. This move reflects the company’s ongoing struggle with weakening demand and heightened competition.
The decision to lower prices comes after Tesla’s disappointing Q1 delivery figures. Additionally, the company has slashed the subscription cost of its Full Self-Driving (FSD) package to stimulate its adoption. Furthermore, Tesla has announced a workforce reduction as part of its initiatives to bolster earnings.
Tesla Q1 Earnings: What to Expect?
Wall Street expects Tesla to report sales of $22.26 billion, down about 4.6% year-over-year. This decline reflects the ongoing pressure on its automotive revenues. However, improvements in storage revenue and momentum in services and other revenue will likely support its overall sales.
Lower sales and declining margins due to price cuts are expected to weigh on its bottom line. Analysts expect Tesla to post earnings of $0.49 per share in Q1, down from $0.85 in the prior-year quarter.
Is Tesla a Buy, Sell, or Hold?
Given the sales and margin headwinds, Wall Street analysts are sidelined on TSLA stock ahead of Q1 earnings. Tesla stock has seven Buys, 20 Holds, and seven Sell recommendations for a Hold consensus rating. The average price target on Tesla stock of $182.58 implies about 24.16% upside potential from current levels.
Insights from Options Trading Activity
While Wall Street analysts are sidelined on TSLA stock, options traders are pricing in a +/- 9.70% move on earnings, smaller than the previous quarter’s earnings-related move of 12.13%.
The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
