Tesla Earnings Preview: Price Cuts to Hurt Margins or Drive Market Share Growth?

investing.com:

Electric vehicle manufacturer Tesla Inc (NASDAQ:TSLA) is set to release its Q3 earnings report today. The Austin Texas-based giant's stock has been trading sideways recently, and investors are hoping this report will provide the stock the spark it needs to resume the uptrend.

Throughout the year, Tesla has slashed its prices on numerous occasions, raising concerns that these moves have eaten into the company's margins and earnings per share. Moreover, key data on production and deliveries, disclosed just before the earnings report in early October, revealed a 6% drop in the 3rd quarter compared to the previous quarter.

Although the Elon-Musk led company has attributed some of the delivery declines to production issues, the company seems undeterred by these figures. Tesla's CEO, Elon Musk, previously announced a decrease in production for the 3rd quarter due to planned factory maintenance work.

However, the market's general expectation was for deliveries to exceed 455K units, significantly higher than the 430K range. Yet, the company fell short of this mark. These production and delivery numbers that fell below expectations have also led to weaker earnings forecasts for the 3rd quarter.

Putting the previous quarter's performance into context, Tesla reported an EPS of $0.91, surpassing InvestingPro's expectations by 10%. The quarter's revenue reached almost $24.92 billion, aligning closely with expectations.

For the Q3 results to be announced today, it is seen that the EPS expectation has been reduced by 50% as it is estimated to be announced as $0.73. With 21 analysts revising their views downwards, it is estimated that the company's earnings could come in at $ 24.14 billion.

The quarterly results announced this year have