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’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.
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.