Here’s what you should look for in Tesla Q4 results on Wednesday

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is a News Reporter at Invezz covering the European, Asian and North America stock markets. Wajeeh has 5… read more.
on Jan 26, 2022
  • Tesla Inc is scheduled to report its fourth-quarter results today, after the bell.
  • Jefferies analyst explains what investors should look for in the earnings report.
  • Shares of the leading U.S. electric car manufacturer are down 20% in January.

Tesla Inc (NASDAQ: TSLA) is down 20% in the stock market this month, but Jefferies’s analyst says a beat on 30% gross margin and 15% EBIT margin could get the stock going.

Philippe Houchois sees close to 50% upside in Tesla

On CNBC’s “Worldwide Exchange”, Philippe Houchois agreed that competition had been rising for Tesla but said it didn’t post much of a threat for the EV manufacturer, at least so far.

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Lots of carmakers are launching strong competitors, but what isn’t clear is if their products can actually generate the kind of profitability that we see at Tesla, which is definitely out of the norm of the industry. And then, Tesla’s story in autos goes well beyond the cars.

Houchois rates Tesla at “buy” with a price target of $1,400 that represents a little under 50% upside from here. Earlier in January, Tesla gave a promising preview of its fiscal fourth quarter.

Tesla must report consistent growth and profitability

According to Jefferies’ managing director, Tesla must confirm the accelerated growth and profitability they reported in the previous quarter wasn’t just a one-time event. He added:

The margin of Tesla was pretty much double the rest of the industry in Q3. They also get an extra cash boost from negative working capital. So, I need to hear that what we saw in Q3 wasn’t a fluke; that Tesla has indeed reached that velocity of growth and profitability.

He expects Tesla to “negatively confirm” rumours of delays in Cybertruck. Updates on batteries and full self-driving (FSD), Houchois said, will also remain in focus tonight. Also on Wednesday, Research Affiliates Vitali Kalesnik dubbed Tesla a very exciting company.

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