Why is Tesla stock up today?
Posted By John W. B. Rich Posted On

Why Tesla Earnings will Disappoint

Elon Musk and the Tesla team have gone to great lengths to build excitement about delivery numbers and hype the long-term vision of Elon Musk’s companies in the days leading up to earnings.

To us, this suggests that revenue and profit margin numbers will disappoint, or will at least not show the astronomical growth that Tesla’s valuation implies.

Tesla delivered a record 139,300 vehicles in Q3 of this year. This is great progress, but critics have pointed out that they’ve had to slash prices of most models to do so.

Tesla’s hyper-focus on delivery numbers, including several “leaked” emails building anticipation of a record delivery figure, suggest that Musk is trying to deflect attention away from revenue and profit margin.

Musk also announced plans for a new factory on October 18. Again, announcements about grand plans for the future just before the earnings release suggest that Tesla would like investors to focus on the long-term outlook.

Another sign that Musk is trying to deflect attention from something is the frantic announcements about new technologies in the days leading up to the earnings call.

Elon Musk’s tweets on Tuesday October 20th

A few other pieces of news over the last week suggest that Tesla needed a way to boost Q3 profits. For example:

Unclaimed warranties can now be moved from liabilities and booked as gains.

Tesla also ended its 7-day return policy. While it is unclear exactly why, this could suggest that the company needs to cut return costs.

Tesla will report earnings on October 21st, 2020 at 2:30 Pacific. You can follow along on our Twitter, @richtechexec for live commentary. The Tesla earnings call webcast will be available here.

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