Tesla Bull Predicts Q1 Beat On Back Of This Factor But Hopes Elon Musk 'For Credibility' Doesn't Blame High Interest Rates For Delivery Slide

Zinger Key Points
  • Tesla's Q1 revenue may receive from a $926 million in FSD deferred revenue, likely adding 20 cents per share to the bottom-line: Gary Black
  • The fund manager thinks, the stock is already discounting flat deliveries growth for the year.

Tesla, Inc.’s TSLA fundamental challenges persisted in the first quarter, and as the company gears up to report its results, expectations are subdued. Gary Black of Future Fund weighed in on his expectations for the upcoming report on Thursday.

Q1 Expectations: According to Black’s post on X, Tesla’s first-quarter results, due on April 23, are expected to surpass the consensus adjusted earnings per share estimate of 55 cents per share. Black anticipates potential outperformance, possibly supported by $926 million in full-self-driving deferred revenue, now that the software suite is out of beta. This could potentially contribute 20 cents per share to the bottom line, he noted.

However, the specifics of first-quarter revenue will only be revealed with the filing of the 10-Q report with the SEC, Black mentioned.

Black’s base-case scenario predicts adjusted earnings per share of 54 cents.

Outlook: Black, Managing Partner at Future Fund, anticipates management guiding to flat 2024 deliveries growth, equivalent to 1.8 million units. He observed that the stock is already pricing in this figure, as top-ranked analysts have forecasted flat growth.

Moreover, this projection allows management flexibility to adjust fiscal-year 2024 volume expectations from the current estimate of 1.958 million units.

See Also: Everything You Need To Know About Tesla Stock

Black said he hoped that Tesla CEO Elon Musk would not attribute the first-quarter volume decline to higher interest rates, “for credibility”, since “other automakers don't seem to be as impacted.” 

He highlighted that first-quarter overall auto sales increased at a seasonally-adjusted annual rate of 7% year-over-year, with housing starts remaining near record highs and consumers continuing to make significant purchases amid near-record-low unemployment rates.

Why It Matters: Although the first-quarter sales growth of traditional automakers is not directly comparable due to their dealership model, EV competitors, excluding Tesla, witnessed 15-20% year-over-year growth in the first quarter. This growth was led by VolkswagenHyundaiKiaBMWBYD, and Ford, according to Black.

Black suggested that Tesla’s new 2024 delivery estimate of 1.8 million units could hold if the company increases its advertising spend to communicate the affordability of its Model Ys, factoring in EV credits. He also based his expectations on Cybertruck ramp-ups and the resolution of Model 3 changeover issues at Fremont.

In premarket trading on Friday, Tesla declined by 0.67% to $173.43, according to Benzinga Pro data.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

Read Next: Tesla Robotaxis No ‘Magic Model’ To Replace Sub-$30K EV, Says Analyst: ‘Musk Needs To Give Clear Roadmap’

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