Tesla Inc TSLA is set to report earnings after the close on Wednesday in what one analyst is calling one of the most important earnings calls since the Elon Musk-led company went public in 2010.
What To Know: Wedbush maintained Tesla with an Outperform rating ahead of the EV maker's quarterly results.
"While every quarter is important for Tesla we would highlight this upcoming call and guidance commentary as one of the most important moments in the history of Tesla and for Musk himself," Wedbush analyst Dan Ives said in a Tuesday note.
Tesla has experienced a hyper-growth phase over the past few years, dominating share in the EV market, but now the company is up against a tough macro environment intensified by "fierce competition coming from all angles," the analyst said.
On top of that, Musk decided to buy Twitter last year, and many Tesla investors who previously viewed the Tesla CEO as a superhero with a red cape now think of him as a villain, he said.
In the wake of Musk's Twitter takeover, many are concerned the Tesla CEO is not as focused on the EV company as he should be. Musk has also been seemingly polarizing with his tweets since acquiring the social media platform.
"Tesla is Musk and Musk is Tesla. With all the worries about Musk's attention on Twitter ... and other noise created by this ongoing soap opera ... this is a key moment of truth for Musk," Ives said.
The analyst said he will be looking for Musk to "give investors comfort" by reiterating goals for the year and laying out the company's strategic vision. The Twitter situation will be in a "bright spotlight" for the Street, the analyst said.
Wedbush will also be paying close attention to what Musk says about the string of recent price cuts. Although the firm believes the cuts were necessary, it's looking for additional information on how they will impact margins. The firm expects such to be a "key dynamic" on the call.
Lastly, Wedbush highlighted volumes. The Street judges Tesla based on its longer-term outlook of 50% growth annually.
"This target is a double-edged sword in our opinion as 2022 was a painful exercise as the Street every quarter needed to cut their 50% targets to reflect a softer trajectory and that heavily weighed on the stock," Ives said.
Now Musk needs to rip the band-aid off and deliver a more realistic target for 2023 so the Street gets behind the target, the analyst said.
"We view 35%-40% delivery growth for 2023 as the line in the sand based on whisper numbers with 1.8 million units the general bogey for the year," he said.
The analyst firm has a 12-month price target of $175 on Tesla shares.
TSLA Price Action: Tesla shares are down 0.51% at $143.01 at the time of writing, according to Benzinga Pro.
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