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17/07/24
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Tesla Stock Rally May Reverse on Bad Second Quarter Results – Barclays
Barclays analysts have flagged worries about Tesla’s upcoming earnings report for the second quarter and suggest that results falling short of expectations may have a negative impact on the stock.
The analysts expect a potential miss in the gross margin for auto, forecasting it at 16.0%, with a 0.4% quarter-over-quarter drop driven by the non-repeat of Full Self-Driving revenue and weak pricing.
Although improving margins and energy deployments may offset some weaknesses in auto, Barclays believes fundamentals might pressure the stock temporarily.
The bank noted that recently, Tesla’s stock performance has been strong, driven by excitement around future AV/AI ventures like Optimus and robotaxi, as well as improved fundamentals.
Barclays however highlighted possible risks for the stock due to uncertainties surrounding Tesla’s growth strategy. The analysts noted that significant unpredictability was introduced due to Tesla facing uncertainty from an investment thesis pivot, shifting focus to AV/AI businesses from vehicle manufacturing.
They added that although they appreciated the potentially disruptive opportunity from those businesses, they believed it cast uncertainty on Tesla’s path ahead. This meant success of the stock depended on bets with apparent binary outcomes.
Barclays warned that results for the second quarter may force investors to confront ongoing fundamental challenges, despite the technical factors and excitement that supported Tesla’s stock.
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