'A rip the band-aid off quarter': Here's what Wall Street expects from Tesla earnings amid an epic stock skid (2024)

• Tesla is set to report first-quarter earnings results after the market close on Tuesday.
• The earnings report comes amid a sharp stock decline for Tesla, with shares down 43% year-to-date.
• Detailed below is what four Wall Stree firms expect from Tesla's upcoming earnings report.

Tesla has a lot to prove when it reports its first-quarter earnings results after the market close on Tuesday.

The company has been hammered by a barrage of negative news over the past month.

From a big first-quarter delivery miss, to a recall of 4,000 Cybertrucks, to a potential big shift away from a low cost Model 2 toward a robotaxi, Tesla CEO Elon Musk will have to calm the nerve of investors who have experienced painful volatility in recent weeks.

Tesla stock hit a new 52-week low on Monday at $138.80. The stock is down 43% year-to-date and is off 66% from its record high reached in November 2021.

Here's what Wall Street expects from Tesla when it reports its first-quarter earnings results on Tuesday.

Barclays: 'Facing an investment thesis pivot'

Barclays said in a note last week it expects that Tesla's earnings call will be a negative catalyst for the stock as investors come to terms with the company's potential strategic redirection away from a low-cost Model 2.

"Facing an investment thesis pivot and a sea of uncertainty, this Tesla call is extra highly anticipated," Barclays analyst Dan Levy said. "Expect negative catalyst."

Levy said he expects Tesla's closely watched first-quarter gross margins will be below consensus estimates on Wall Street.

"Moreover, we expect little commentary from Tesla to dissuade investors that near-term fundamentals remain weak," Levy said. "FCF may be negative, marking the first quarter since 1Q20 of negative FCF. There could be some shock factor to this result."

Finally, Levy said that while investor questions on the call will be largely focused on Tesla's long-term strategy, "these questions may be unanswered."

Barclays rates Tesla at "Neutral" with a $180 price target.

Bank of America: 'Results matter, but growth factors may matter more'

Bank of America said Tesla's headwinds are well known and are likely fully reflected in the stock price. That will make the company's commentary around the current state of EV demand and its future growth plans all the more important.

That could set the stock up for a positive price reaction, according to a recent note from the bank.

"Despite near term pressures, the unveiling of future growth drives has the potential to support the stock," Bank of America said. "Results matter, but growth factors may matter more."

While the bank doesn't expect Tesla to make any big product announcements during its earnings call, it could provide some hints on the highly anticipated Robotaxi event which is scheduled for August 8. Tesla could also reiterate its intention to launch a low-cost Model 2 in 2025 or 2026, which would likely be met with a positive price reaction in the stock.

Bank of America rates Tesla at "Neutral" with a $220 price target.

Wedbush: 'A rip the band-aid off quarter'

Wedbush analyst Dan Ives said Tesla's upcoming earnings report is "a moment of truth" for the company, according to a recent note.

Ives said the current environment for Tesla is reminiscent of the challenges and uncertainty the company faced in 2015, 2018, and 2020, but it could result in a loss of long-term shareholders.

"This time is clearly a bit different as for the first time many long time Tesla believers are giving up on the story and throwing in the white towel," Ives said.

Ives said it is crucial that Tesla CEO Elon Musk confirms that a low-cost Model 2 is still on the company's product road map, and said that first-quarter results will likely take a backseat to any updates to the company's long-term vision.

"While we and the Street are expecting a rip the band-aid off quarter and a softer outlook, Musk needs to do 5 things on the conference call to start to change the narrative in the Tesla story. If Musk is flippant again and there is no adult in the room on this conference call with no answers then darker days are ahead," Ives said.

You can read more about the five things Tesla must do on the earnings call here.

Wedbush rates Tesla at "Outperform" with a $300 price target.

JPMorgan: '>10% global layoff undermines hypergrowth narrative'

Tesla's recent layoffs suggest the company's long-term growth prospects are dwindling, according to a recent note from JPMorgan.

">10% global layoff undermines hypergrowth narrative and should further dispel notion big 1Q delivery miss was somehow supply-driven," JPMorgan said.

Instead, Tesla's big first-quarter delivery miss was likely driven by a concerning decline in demand for electric vehicles, according to the note.

And the company's premium valuation is at substantial risk if growth is stuttering.

"Despite Tesla shares falling -61% from the all-time high reached in November 2021, its market capitalization is still equivalent to the combined $593 billion valuation of the world's two largest automakers, Toyota and Volkswagen, plus General Motors and Ford, despite those automakers collectively delivering over 30 million vehicles in 2023 vs. Tesla less than 2 million," JPMorgan said. "Clearly, valuation remains extremely demanding."

JPMorgan rates Tesla at "Underweight" with a $115 price target.