Tesla is expected to report lower Q2 profit margins, plans for cheaper vehicle by 2025

From Morningstar: 2024-07-16 05:19:00

Tesla (TSLA) is preparing to release its second-quarter earnings report on July 23 after the US trading session. Analysts examine Tesla’s first-quarter operating profit margins and anticipate another year-over-year decline in Q2. Management confirmed plans for a lower-priced vehicle by 2025 and expects growth in energy generation and storage. Morningstar rates Tesla 3 stars, with a fair value estimate of $200 per share.

Morningstar expects Tesla to have slightly higher deliveries in 2024 compared to 2023, with automotive gross margins of 19%. The company’s Narrow moat rating is based on brand cachet and cost advantages. Tesla’s financial health is robust, with cash reserves far exceeding debt. Potential risks include industry competition and cost overruns in capacity expansions. TSLA bulls believe in the company’s disruptive technology, while bears cite potential challenges from competitors and declining profit margins.

Overall, Morningstar believes Tesla’s valuation is fair given its growth prospects and competitive advantages. The company’s focus on technological innovation and expansion into new markets could drive future profitability. Investors will be watching closely to see how Tesla’s Q2 report shapes its stock performance moving forward.



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