Are redemptions offered during the Tuesday Earnings Event?

Although Tesla (NASDAQ:TSLA) appears to be having one set of struggles, it’s still an 800-pound elephant when the conversation turns to the electric vehicle (EV) market. As a result, Tesla’s upcoming Q1 2024 earnings report will be a closely watched event for bulls and bears alike.

So mark Tuesday, April 23rd on your calendar and eat some popcorn. Because earnings reports should provide thrills, chills, or both. In the meantime, consider whether it really makes sense to take a pre-earnings Tesla stock position, as muted expectations can sometimes lead to positive surprises.

It’s one problem after another for Tesla.

Against muted expectations, Tesla already released its quarterly EV delivery figures earlier this month. Shocking investors and analysts, Tesla delivered slightly fewer than 387,000 vehicles in the first quarter of 2024, down about 9% from the same period last year. Even Wall Street’s lowest estimates assumed Tesla would have delivered about 20,000 more vehicles than that.

Looking at it from another angle, Tesla sold 46,000 fewer vehicles in the quarter than the company produced. This points to two problems that concern Tesla and the industry as a whole: oversupply of vehicles and continued decline in demand for EVs.

There’s no denying that Tesla has serious problems at this point. CEO Elon Musk acknowledged on his social platform

Meanwhile, JPMorgan Chase (NYSE:JPM) analyst Ryan Brinkman was blunt about Tesla’s disappointing first-quarter EV deliveries reflecting “demand issues.”

We’ll revisit Brinkman’s comments in a moment. But it’s worth noting right now that the overall tone of Tesla’s upcoming first-quarter earnings report shouldn’t be a complete mystery since the automaker’s vehicle delivery numbers are already known to the public.

Plus, Wall Street doesn’t expect much from the company. The consensus of analysts is that Tesla will have earned 49 cents per share in the first quarter of 2024. This represents a significant decline compared to 71 cents per share in the previous quarter and 85 cents per share a year ago. .

It’s also worth mentioning that Tesla achieved 10 consecutive quarterly EPS records before breaking that streak with poor EPS in the third and fourth quarters of 2023. Could we be in store for a positive surprise on Tuesday that isn’t as bad as expected?

This is worth considering, especially as Tesla has been facing one problem after another recently. The company announced plans to lay off more than 10% of its workforce in what Wedbush analyst Daniel Ives called an “ominous sign” for Tesla. In addition, two veteran Tesla executives are leaving the company.

Then, when Musk announced his commitment to investing more of Tesla’s resources into self-driving technology in general and robotaxi in particular, the market reacted negatively. And just in case all of this wasn’t enough, Tesla hit another speed bump when the automaker announced it was recalling the odd-looking Cybertruck due to problems with the vehicle’s accelerator pedal.

The recall only applies to 3,878 Cybertrucks, but the cumulative effect of bad news upon bad news has sent Tesla stock to new near-term lows. Already, TSLA stock is down about 40% year to date.

Two Pessimistic Tesla Stock Price Targets

Now let’s go back to Brinkman, the JPMorgan analyst. He recently lowered his price target on Tesla’s stock price from $130 to $115, giving the stock a sell rating.

Even after the stock plunge, Brinkman warned that TSLA shares “could fall much further” if Tesla’s vehicle volume and sales growth do not improve quickly. Along with this, analysts at JPMorgan believe that Tesla’s aforementioned layoff plans expose the company’s “high-growth narrative.”

But Brinkman may not be Tesla’s most dedicated bear. Not long ago, Deutsche Bank (NYSE:DB) analyst Emmanuel Rosner drastically lowered his Tesla stock price target from an already pessimistic $123 to $89. This represents a significant drop from Tesla’s current stock price of around $150.

Rosner is concerned about Tesla allocating significant resources to robotaxi. Such concerns are somewhat understandable, as robotaxi is a nascent and unproven market.

But Musk and Tesla didn’t get to where they are today by playing it safe. I think it’s too early for investors to declare Musk’s robotaxi vision a failure. Because in reality it hasn’t even begun in earnest.

But that’s a long-term consideration. In the near future, bold investors may be willing to bet on widespread pessimism to shift to optimism after widespread returns. It would be enough for Tesla to post at least decent, if not ideal, quarterly financial results.