Tesla Shares Stumble Pre-Earnings, Price Cuts Worry Investors

Key Points

• TSLA shares are down 3% in pre-market trading before earnings. 
• Tesla announced price cuts on two models ahead of earnings. 
• Wall Street analysts are bullish over the long term. 

Tesla’s Q1 earnings are due out after the closing bell, and investors are waiting on pins and needles. TSLA shares have sunk about 3% in pre-market trading on earnings day as investors react to the company’s latest price cuts. 

Elon Musk has Wall Street talking after moving to slash prices on a couple of Tesla models (certain Model 3 and Model Y vehicles) by as much as $3,000 ahead of earnings. It’s the latest in a series of price cuts that Tesla has made this year amid a perfect storm of rising interest rates, increasing competition, and ebbing demand. 

It’s unclear how the price cuts will translate to Tesla’s profits, but investors are not waiting around to find out. Nevertheless, there are plenty of TSLA bulls left. 

Analysts are predicting profits of $2.6 billion vs. $3.3 billion a year ago. Meanwhile, Wall Street is expecting Tesla to report revenue of $23.6 billion, which would represent an increase of about 26% vs. year-ago levels ($18.7 billion). 

Tesla stock has taken investors on a roller-coaster ride in 2023, rising as high as $207 at the end of Q1 and most recently hovering at the $184 level. 

Tesla Long-Term Bull 

CFRA’s Garrett Nelson has a strong buy rating on TSLA stock and told CNBC that he is bullish on the stock for the long term. He points out that the EV maker has managed to beat consensus profits estimates in 13 out of the past 14 quarters. 

Nelson is anticipating Tesla will report flat earnings vs. last year’s results. Looking further out, there are catalysts that are bullish for Tesla stock, including the much-anticipated Cybertruck and a new gigafactory in Mexico on the outskirts of Monterrey, even as it ramps up production in its latest factories in Texas and Germany. 

With the U.S. government’s tax incentives, consumers can purchase a Tesla Model Y for under $40,000 as the EV price wars heat up.