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Tesla (NASDAQ:TSLA) shares have been climbing as the firm’s Q3 report approaches. There’s a lot of reason for optimism about the update, but things might look different afterwards.
The end of the $7,500 EV sales credit in the US on 30 September caused a surge of demand last month, which could result in a strong earnings update. But I’m looking for opportunities when things settle down a bit.
Q3 earnings
Tesla’s Q3 earnings are due next week and could reflect anyone thinking about buying an electric vehicle in the near future having brought their decision forward. Both Ford and General Motors have reported higher sales.
Tesla’s global deliveries during Q3 were around 7% higher than the previous year, with speculation that strong US sales might be offsetting weaker demand in Europe.
As a result, analysts have been increasing their revenue and profit forecasts for the company’s upcoming announcement. But the big question is: what comes after this?
Beyond Q3
Apart from Q3 earnings, tangible reasons for positivity are in short supply for Tesla investors at the moment. There’s some room for optimism, but not much in the way of detail, and plenty for pessimists to jump on.
The surge in demand for Q3 is expected to be replaced by a drop in Q4 and beyond. The company’s new affordable vehicles might help with this, but sales are expected to be materially lower.
There’s also still no date for the launch of an unsupervised robotaxi service. Elon Musk hopes this will be next year, but the CEO acknowledges he’s often too optimistic with these things.
Plans to produce 5,000 robots this year are also in doubt, with the AI team lead joining Meta Platforms. Given that Optimus is eventually is supposed to make up 80% of Tesla’s value, this is a real issue.
One big announcement
Tesla clearly has a lot to do in order to justify its $1.35trn market valuation. But there’s always a sense with the stock that something might be just around the corner.
The company has clear cost advantages over its rivals when it comes to making cars – including robotaxis. These come from its scale and vertifical integration and are genuine strengths.
This is why it feels like the company – and the stock – is only ever one announcement away from something huge. This could be a robotaxi update, progress on Optimus, or something AI-related.
Despite the confident pronouncements of both bulls and bears I think there’s real uncertainty about whether Tesla can pull these things off. And that means I’m looking to be strategic.
Wait and see
I think Tesla’s potential makes the stock valuable. But at the moment, it looks as though the share price is being driven higher by short-term optimism around the Q3 earnings report.
I’m waiting for this to settle down before looking at making a move. I’m going to keep an eye on the stock and I’ll buy it if it reaches a level that I think offers enough value for the risks involved.
