Market Minute: Earnings Preview: Tesla (TSLA)

One of the main market events tomorrow is Tesla (TSLA) earnings after the close. The stock is one of today’s biggest premarket losers and is down 40% year-to-date, though still holding onto gains of more than 55% over the last year. Zacks estimates it will report 1Q25 EPS of $0.44 (-2% year-over-year) and revenue of $21.5 billion (+1% year-over-year). The options market is currently implying around a $21.50 move, or about a 9% move.

Much has been made about Tesla’s ability to avoid U.S. tariffs because of its domestic manufacturing. However, sentiment against Elon Musk has tarnished the brand, leading to boycotts around the world and some acts of destruction. 1Q deliveries already warned investors: 336.7K cars, -13% y/y, with production of 362.6K.

Investors should also note that a significant portion of revenue comes from China. It was Tesla’s second-largest market in 2024, where it delivered 36.7% of its cars. It was already facing stiff competition from Chinese automakers like BYD and could see market share there plummet. It also has not unveiled a long-awaited cheaper model. Though at the beginning of this year, its CFO said it was “on track” to launch in the first half, Reuters reports that the can has been kicked down the road.

One argument for Tesla is that it isn’t an auto company, it’s a tech company. It owns a great deal of EV charging infrastructure in the U.S. – though that relies on continued adoption of EVs by the American public. The Trump administration is reportedly planning to kill the consumer tax credit for EVs, disincentivizing consumers, and the promise of cheaper gasoline is another potential blow. Other promises, including full self-driving, robotaxis, and more, have yet to materialize in any substantive way.

On the FSD front, note that Tesla uses a vision-based AI system, while competitors combine vision with other sensors including LIDAR. This has led to a fun YouTube Wile E. Coyote-esque test, where the Tesla drives through a picture wall – although one wouldn’t expect that to repeat on the open road, it shows the limitations of a visual-only system.

Overall, while many bears have been burned by Tesla before, it’s hard to see a lot of positive catalysts for the stock right now. Investors may focus on guidance, but Musk’s dismal approval ratings are a potential millstone around the company’s neck for the foreseeable future.