Earnings Report Preview | Tesla's continuous price reduction actions, profit margin remains the focus of investors' attention.

According to the Zhongtong Finance APP, Tesla (TSLA.US) will announce its third-quarter earnings report for 2023 after the US stock market closes on October 18th. Wall Street currently expects Tesla's Q3 revenue to be $24.3 billion, compared to $21.5 billion in the same period last year; and the estimated adjusted earnings per share to be $0.73, compared to $1.05 in the same period last year.

This year, Tesla has lowered the prices of its electric vehicles multiple times to stimulate demand. However, this move has also sacrificed the company's profit margin. Data shows that Tesla's Q1 gross margin was 19.3%, lower than the 23.8% in Q4 of last year, and this indicator further dropped to 18.2% in Q2. Tesla's recent announcement of another price reduction earlier this month has once again raised concerns among investors about its profit margin.

Morgan Stanley stock analyst Adam Jonas believes that Tesla's Q3 gross margin may further decline to 17.5%. He stated that investors are cautious about Tesla's performance for the rest of this year, and many investors are unsure whether Tesla can achieve profit growth next year. He also added that investors are not "enthusiastic" about Tesla's electric pickup truck, the Cybertruck.

Gene Munster, a well-known technology analyst and managing partner of Deepwater Asset Management, pointed out that Tesla's Q3 earnings report will be "all about profit margins." He stated that the operating profit margin is the core of the debate among investors about whether Tesla is an automaker or a technology company. He believes that Tesla's gross margin may decline again in Q3 but may rebound in Q4.

UBS analyst Joseph Spak has lowered his profit expectations for Tesla in the coming years and believes that these expectations have "downside risks." He said, "We expect Tesla's earnings per share to decline moderately."

In addition, data released by Tesla earlier this month showed that the company delivered 435,059 vehicles globally in Q3, about 20,000 vehicles less than expected. The company needs to deliver over 475,000 vehicles in Q4 to achieve its annual delivery target of 1.8 million vehicles.

Citigroup analyst Michaeli said that considering Tesla's limited inventory reduction in Q3, the recent announcement of price reductions for the Model 3 and Model Y in the US market, and the current valuation of the stock, the market reaction to Tesla's Q3 earnings report may be similar to a "neutral or slightly negative" reaction to the company's Q2 earnings report.