July 24 2024: Tesla’s fiscal second-quarter earnings matched earlier projections, leading to anticipated results. However, the main focus was the auto gross margin miss, which, alongside lower-than-expected EPS, caused a premarket drop in Tesla’s shares on Wednesday.
Analysts were looking for more insight into Full Self-Driving (FSD) adoption rates following recent price reductions, but management only mentioned a “meaningful increase.”
Despite the mixed outcomes and subsequent decline, Canaccord Genuity analysts believe the “major catalysts” for Tesla (NASDAQ
) stock are still ahead.
The first of these will be on October 10, the rescheduled date for Tesla’s Robotaxi Day. Analysts expect the event to reveal more details about Tesla’s planned robotaxi vehicles and services.
During the earnings call, Elon Musk expressed confidence that “unsupervised” FSD could be achieved late this year or next year, which is “much sooner than our expectations,” noted Canaccord. However, analysts warned that Musk has historically been optimistic with timelines.
Musk also minimized regulatory concerns, suggesting that if FSD achieves a mean time between failure (MTBF) better than a human, it would address safety issues.
Analysts remain cautious about the regulatory environment but acknowledge their caution might be overly conservative. They are particularly concerned about the predictability, transparency, and cost of Tesla’s end-to-end approach.
“Look out for new vehicles, including more affordable models, expected to begin production in the first half of 2025… another major catalyst,” analysts added, reaffirming a Buy rating and a $254 price target on Tesla stock.
Tesla reported adjusted EPS of $0.52 on revenue of $25.5 billion for the second quarter, missing Wall Street’s EPS estimates of $0.61 but exceeding the expected revenue of $24.33 billion.
The bottom line was impacted by a drop in automotive sales to $18.53 billion from $20.42 billion a year ago. Excluding credits, gross margins fell to 14.7% in Q2 from 18.1% the previous year, below analysts’ estimates of 16.3%.
