Today, Wall Street is bracing for another Tesla (NASDAQ:TSLA) earnings call. The electric vehicle (EV) innovator is set to report first-quarter 2022 earnings tomorrow and investors have plenty of questions. Tesla saw significant growth in 2021, but TSLA stock has displayed significant turbulence since the start of the new year. Still, Wall Street remains mostly bullish on shares. Currently, analysts on TipRanks rate it as a “moderate buy” with an average price target of $1,006. Morgan Stanley’s Adam Jones also describes TSLA as “undervalued and defensible.”
However, that doesn’t mean TSLA stock should necessarily be expected to beat Wall Street estimates. After all, while the company has already set a sales record in Q1, its production constraints haven’t eased. Tesla’s operations in Shanghai are still closed due to rising Covid-19 cases, compromising the company’s production in one of the world’s largest EV markets.
During the last earnings call, CEO Elon Musk noted that Tesla was not immune to supply-chain issues. Tomorrow’s call should provide insight into just how much the company has been affected. So, let’s take a look at what else investors should be watching when the company reports earnings.
1. Earnings Estimates
Earnings estimates are one of the first things many investors watch for on any earnings call. This year, however, Tesla may have a difficult time meeting Wall Street expectations, let alone exceeding them. As Barron’s reports, “vehicle deliveries didn’t meet Wall Street’s original estimates, and analysts haven’t moved their earnings estimates since quarterly production numbers came out April 2.”
As noted before, Tesla’s delivery statistics will be negatively effected by the Shanghai shutdowns. What’s more, while the company has begun production at both its Berlin-Brandenburg and Austin, Texas facilities, both factories only opened recently. That may put production and delivery numbers up in Q2, but tomorrow’s call should still yield disappointing results. If Tesla does fail to meet the earnings estimates set by Wall Street, investors should look ahead to the next quarter.
2. Production Updates
It has been a difficult quarter for Tesla, but the news hasn’t been all bad. Rather, the company’s Berlin delivery day and Gigafactory Texas Cyber Rodeo both brought exciting updates for TSLA stock investors. For example, the new Tesla Model Y is already in production in Austin. Next year will also bring the Tesla Roadster and Cybertruck.
Elon Musk will likely report less-than-positive news tomorrow. However, the CEO will also want to give investors a reason to be excited despite the bad news. Most likely, this will mean updates on these two long-awaited vehicles. Musk will also likely provide updates on EVs already in production at the Austin, Texas facility. At the Cyber Rodeo, the CEO stated that Gigafactory Texas would become “the highest volume car factory in America.” With Chinese operations currently compromised, investors will want to see Tesla ramping up production in the U.S. and Europe.
3. Updates on Twitter
Tomorrow, investors will mainly be concerned with Tesla’s Q1 earnings report. However, many eyes will also be on a different company: Twitter (NYSE:TWTR). Elon Musk’s recent bid to buy the social media company has many investors watching closely — and they have good reason to be curious. Rumors are circulating that Musk may sell some TSLA stock in order to finance the acquisition. Shares would fall if that were to happen.
Elon Musk began offloading shares back in late 2021, sending the stock down each time. Although tomorrow’s call isn’t about Twitter, it wouldn’t be out of character for Musk to drop a hint as to what’s coming on that front. Yesterday, the CEO tweeted “Love Me Tender,” causing investors to speculate about a tender offer. Anyone who holds TSLA should be watching the potential Twitter deal just as closely as Q1 earnings.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
