Tesla (NASDAQ:TSLA) is still recovering from a difficult month, but it may be about to get worse. The electric vehicle (EV) producer is gearing up to report earnings for the third quarter of 2023, and Wall Street isn’t optimistic. Not that it has much reason to be. TSLA stock has been fairly volatile over the past month and, despite some growth in early September, has been trending downward ever since.
This hasn’t been helped by the fact that Tesla’s recent Q3 deliveries report fell short of its Q2 progress by 7%. That’s not encouraging to see. We won’t know for sure how the company fared until the Q3 earnings report on Oct. 18. That said, shares are likely to struggle until then as negative momentum continues to build.
What’s likely to happen when Tesla does report Q3 earnings? Let’s take a closer look at what experts are saying and assess what investors should be watching for.
What’s Happening With TSLA Stock
Despite some progress last week, TSLA stock is struggling today, likely due to the Q3 deliveries report. As of this writing, it is down almost 2% for the day, and trading has been volatile. This suggests that shares will continue to fall even further even when markets close today. As the recent deliveries suggest that the earnings report won’t be positive, this is not surprising.
TSLA stock is declining, but Wall Street sentiment toward it may be falling even faster. Yesterday, two analysts issued bearish takes on it. Ryan Brickman of JPMorgan reiterated a “sell” rating and a price target of $135. While that’s an improvement over his recent per-share forecast of $120, it still represents a downside potential of more than 45%. Goldman Sachs’ Mark Delaney lowered his price target to $252 and rated the stock as a “hold.”
William Stein of Truist Financial, who lowered his own TSLA stock price target to $243, also maintains a “hold” rating. An even harsher take came from Toni Sacconaghi of Bernstein two days ago, who maintained a “sell” rating and a price target of $150. Per TipRanks:
“Sacconaghi also expressed concern over Tesla’s auto gross margins, expecting potential downside due to lower volumes and significant discounts on cars sold from inventory. He also perceived weakness in the demand and a lack of new high-volume offerings, predicting that Tesla would need to cut prices further next year to drive volumes, which would impact margins.”
Overall, TSLA stock maintains its status as a moderate buy consensus on TipRanks, with 12 Wall Street analysts rating it as a buy and 12 rating it as a hold. Four analysts maintain sell ratings.
Tesla’s Next Earnings Report
As TipRanks notes, Sacconaghi believes that Tesla will need to demonstrate a strong Q4 and may require further price cuts to achieve its FY 23 delivery forecast. Meeting that goal would set the company up nicely to enter 2024, though the forecast has been adjusted. However, the recent deliveries miss doesn’t suggest that Tesla is making the type of progress that Wall Street wants to see. Price targets are being lowered ahead of earnings for a reason.
Deutsche Bank even predicted that Tesla would miss on Q3 deliveries. Now that this forecast has proven correct, analysts have even less reason to be optimistic about TSLA stock. Until Oct. 18, the company will be shrouded with uncertainty as investors wait to learn how poorly it performed in Q3.
On the date of publication, Samuel O’Brient did not have (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.
