Article by IG Market Analyst Monte Safieddine
Tesla (TSLA) Q4 Analysis, Charts, and Price
When is Tesla’s results date?
It’s expected to get volatile for Tesla’s share price on Wednesday, January 24th after market close, as that’s when they’ll be releasing their fourth-quarter results.
Tesla share price: forecasts from Q4 results
It wasn’t a pretty picture last time around, as third-quarter results were a miss on both earnings and revenue and came with added caution on the Cybertruck’s potential (or lack thereof) to deliver significant short-term positive cashflow.
Production and Deliveries Breakdown
But looking beyond that and breaking down deliveries and production for the final quarter of 2023, it was a record. Deliveries totaled over 484K with production nearly 495K, and in all producing 1.846m and delivering under 1.81m while above 2022’s 1.37m and within October’s guidance of 1.8m, fell short of its earlier 2023 goal of two million. The breakdown for the final quarter of 2023 showed nearly 477K Model 3/Y were produced and over 461K delivered, while “Other Models” were 18.2K (3.8% of the total) and 23K respectively.
Tesla’s Eventful Quarter
It was a quarter where Chinese rival BYD and its lower-priced models helped it overtake Tesla as the world’s largest producer of electric vehicles, even if there’s the argument by Elon Musk that his company is “an AI/robotics company that appears to many to be a car company” and in turn shouldn’t fall under an apples-to-apples comparison.
And it’s been busy on other fronts as well. There were (1) troubles in Scandinavia though hasn’t seemed to dent its sales in the region, (2) mixed numbers for other areas as they were tested for Germany and UK but strong for China with a 69% increase year-on-year for December according to CPCA (China Passenger Car Association), (3) the Cybertruck release, (4) Model 3 refresh for some markets in what is considered to be a lineup that aside from recent releases has aged quite a bit, (5) further progress on the charging port adoption front with its massive network of chargers, (6) recalls that aren’t uncommon amongst automakers and for Tesla only required an over-the-air software update, and (6) price cuts with the average lowered again during the fourth quarter (cargurus.com).
And then came more at the start of this quarter with rising labor costs, further price cuts, and supply chain woes on recent geopolitical factors. Expect investors to note that and any further updates on the low-cost model where they are already “quite far advanced” that would feed into the mass market with a lower price point unlike the Cybertruck, its guidance for 2024 in the face of subsidy and tax credit reductions/removals and whether it’ll translate into even more price cuts this year to retain growth, how it might impact profit margins, and its plans on expansion in terms of geographic locations with rate cuts in view this year that might ease what was expected to be a “stormy” macroeconomic situation.
EPS and Revenue Forecasts
In all, expectations for the fourth quarter are that we’ll get an earnings per share (EPS) reading of $0.74, a lower figure both quarter-on-quarter as well as year-on-year. Revenue should come in stronger based on both metrics, rising to $25.5bn, and where growth should be seen across all its key segments. Margins will likely remain tested (relative to figures before 2023) but improve into the 18% handle from 17.89% in Q3 (source: Refinitiv).
As for analyst recommendations, there are five in the ‘strong buy’ category, 12 ‘buy’, 19 ‘hold’, and four for both ‘sell’ and ‘strong sell’, with the average price target amongst them only recently above its falling share price (source: Refinitiv).
Trading Tesla’s Q4 results: weekly technical overview and trading strategies
There’s no denying how strong 2023 has been for the ‘magnificent seven’, and Tesla relatively outperforming amongst them (Nvidia +233%, Meta +188%, Tesla +109%, Amazon +78%, Alphabet +57%, Microsoft +55%, Apple +48%), but those gains were realized in the first half when it comes to its share price and started to get tested after mid-July.
The technical overview on the shorter-term daily time frame was a bit rosier back when price managed to remain within its bull channel, with the break beneath it at the start of this year throwing a wrench into its key technical indicators and included a negative DMI (Directional Movement Index) cross and price beneath all its main short and long-term daily moving averages. Zooming out to the weekly time frame, and while the same negative cross has occurred, price-indicator, as well as indicator-indicator proximity, has made it difficult to get enough clarity on the technical front given the ease with which they can generate signals on a not-so-significant move.
That has translated into an overview that’s more cautious at this stage even as it suffers from negative technical bias, with most weeks offering relatively controlled intraweek moves. There’s the obvious matter that the earnings release is a fundamental event where technicals are shelved, especially when it involves a surprise, and means technical levels will likely struggle or even fail to hold once the latest figures are released. That means conformists ought to go in with added caution avoiding fading any move towards 1st levels and retaining that caution even when it approaches 2nd levels, while contrarian breakout strategies may see added follow-through if price has already gotten near it just before the event.
Tesla Weekly Chart with IG client sentiment