Shares of Tesla (NASDAQ:TSLA) stock are in full focus today, as the leading electric vehicle (EV) company is set to report its first-quarter earnings after the market close. Yesterday, Tesla shocked investors by making even more price cuts to its vehicles, the company’s fourth this year. All three versions of the Model Y were cut by $3000, or about 6%, while the base version of the Model 3 saw a price reduction of $2000, or about 5%, to $39,990. Prices for the Model Y will now range between $46,990 and $53,990
These price cuts were likely enacted in order to fall below the U.S. government EV tax credit maximum price of $55,000. As a result, the vehicles are now eligible for a $7,500 tax credit. The price cuts may also have been influenced by falling demand, so Tesla could be trying to attract more buyers with a lower price. Lower price cuts could also potentially steal market share from other EV and legacy competitors.
Meanwhile, CEO Elon Musk has made it clear that he is not trying to start a price war but instead improve profitability:
Tom, we’re not “starting a price war”, we’re just lowering prices to enable affordability at scale
— Elon Musk (@elonmusk) April 15, 2023
With that in mind, let’s take a look at three key metrics to watch when Tesla reports earnings.
TSLA Stock Alert: 3 Key Things to Watch When Tesla Reports Earnings
For the quarter, analysts are expecting revenue of $23.35 billion and an adjusted EPS of 85 cents. That would signal year-over-year (YOY) revenue growth of 24.5% and an EPS decline of 22 cents.
The big question will be whether or not Tesla’s frequent price cuts this year have offset possible falling demand. This could also be reflected in the company’s gross profits, which are estimated to be $4.83 billion compared to $5.78 billion during Q4 and $5.45 billion during Q1 of 2022. Meanwhile, net income is forecasted to be $2.90 billion compared to $3.73 billion a year ago.
Guidance will also be an extremely important aspect of Tesla’s earnings. Revenue for Q2 is expected to be $24.89 billion on top of an adjusted EPS of 93 cents. That would reflect YOY revenue growth of 47% and an increase in EPS by 17 cents. For all of 2023, analysts are forecasting revenue of $102.49 billion with an adjusted EPS of $3.95.
On the date of publication, Eddie Pan 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.