Tesla reports earnings this week—and it’ll be a big deal for Wall Street. It always is.
Tesla stock is up about 122% over the past 12 months.
The electric vehicle maker’s fourth-quarter report comes after Wednesday’s closing bell. And investors should brace for volatility.
For the past four of Tesla’s quarterly reports, the stock has made big moves—up 22%, down 12%, up 12%, and down 12%.
Profit margins, growth, and CEO Elon Musk explain a lot of those moves.
When shares dipped 12% after second-quarter earnings, the company’s operating profit had come in at 6%—not the 8% that Wall Street was hoping for. And Musk didn’t offer many details about a new model expected in the first half of this year.
No new car equals less growth. That and the margins doomed the stock for a day or two.
When shares jumped 22% after third-quarter earnings, operating profit margins had come in at 11%. Wall Street was expecting about 8%. And Musk predicted 20%-to-30% growth this year, with the help of a new model.
Better profits and the prospect for faster growth send shares soaring.
For the fourth quarter, margins will matter. Wall Street expects operating profit margins of about 10.5%, up from about 8% in 2023’s fourth quarter.
Lower costs to produce cars and higher production should help. Tesla delivered about 496,000 cars in the fourth quarter, a record, and up from about 485,000 delivered in the fourth quarter of 2023.
Then, there is Musk and growth.
First, growth. There are two things on investors’ growth agenda: Cars and self-driving cars.
They want to hear that the lower-priced new model, which Wall Street typically calls the Model 2, is on track for a launch in the coming six months.
And they want to hear that orders for the updated Model Y look strong in the U.S. and China. The new car and the new Y will help Tesla sell more cars this year than the 1.8 million it sold in 2024.
Self-driving cars have also become important. Coming into Monday trading, the stock was up about 70% since Tesla’s Oct. 10 robo-taxi event.
The auto maker plans to launch a self-driving robo-taxi service late this year. A reiteration of the timeline—or more detail—on the earnings call would mean gains.
As for Musk, he has yet another job—the de facto head of the Department of Government Efficiency, President Donald Trump effort to cut wasteful spending. Investors are used to Musk having lots of irons in the fire, but they still want to hear from him on conference calls sounding engaged and in control.
Musk might just be the most important thing.
If Wall Street is jittery about Wednesday, this might help: The stock is up about 122% over the past 12 months, trouncing the 25% gain for the S&P 500.