Tesla's stock price continued its decline for the fourth consecutive day ahead of the Q3 earnings announcement. This is due to renewed pessimism about short-term profit forecasts.
On the 22nd (local time) in the New York stock market, Tesla's stock closed at $217.97 per share, down 0.40% from the previous session. At one point during the day, the decline reached over 1.6%. Tesla's stock price plunged 8.8% the day after the Robo (autonomous) taxi unveiling event on the 10th, then slightly recovered, but has been falling for four consecutive trading days since the 17th.
This is analyzed as a result of growing investor disappointment following the Robo taxi unveiling event, coupled with a worsening short-term profit outlook. Based on the closing price that day, the market capitalization was about $696.3 billion, significantly below the $762.8 billion just before the Robo taxi unveiling.
Currently, the market expects Tesla's Q3 earnings per share (EPS), to be released after the market closes the next day, to be $0.60, down 9.1% compared to the same period last year. This is attributed to aggressive subsidies for electric vehicle sales, which are expected to negatively impact net profits compared to last year.
If the Q3 earnings fall short of market expectations, Tesla's stock price decline is expected to deepen. Tesla's stock price has fallen after 6 out of the last 8 quarterly earnings announcements. Investment analysis firm Morningstar maintained Tesla's fair stock price at $200 yesterday, implying an additional downside potential of 8.24% from the current price.
Financial media MarketWatch identified three concerns raised by Tesla pessimists: shrinking profit margins due to intensified electric vehicle competition, expanded U.S. tariffs on Chinese-made batteries, and worries about Tesla's energy storage system (ESS) business due to sharp price drops in solar panels and batteries. It will also be crucial to see what messages Tesla CEO Elon Musk delivers during the upcoming earnings conference call regarding autonomous driving technology and plans for launching low-cost electric vehicles.
Jay Woods, strategist at investment firm Freedom Capital Markets, said, "Currently, Tesla stock is trading more on actual figures and performance than on expectations for future big events," and predicted that if a bear market begins after this earnings announcement, the stock price could fall back to around $182. Gordon Johnson of GLJ Research mentioned Tesla's aggressive fundraising and reduced emission credit trading, analyzing that there is a possibility of a "significant earnings miss."
On the other hand, Dan Ives, senior analyst at Wedbush Securities and known Tesla bull, forecasted, "Although there will be many changes to the Tesla story by next year, ultimately, the strength of the Chinese market revealed this quarter will become the core of Tesla bullishness as its AI (artificial intelligence) strategy evolves."
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