The preceding year marked significant success for Tesla (NASDAQ:TSLA), witnessing a remarkable doubling of its stock and delivering one of its most impressive annual returns. However, Tesla appears to be facing challenges at the beginning of 2024, with nearly one-sixth of its market capitalization already eroded. Despite this downturn, Tesla has demonstrated resilience compared to other electric vehicle (EV) players like Rivian and Lucid Motors, the latter experiencing record lows recently. Chinese EV stocks, including NIO and Xpeng Motors, have faced even more adversity due to the ongoing sell-off in Chinese stocks.

As Tesla, the leader in the EV market, prepares to release its Q4 earnings on January 24 after the closing bell, investors are keen to understand the company’s performance and whether it presents a buying opportunity amidst the current stock dip.

Tesla Q4 Earnings Preview: What to Expect

Analysts anticipate a modest 6% year-over-year increase in Tesla’s Q4 revenues, reaching $25.78 billion. However, there is a projected decline of almost 44% in earnings per share, down to $0.60. This decline is attributed to Tesla’s strategic price cuts, impacting not only its own profit margins but also those of other automakers.

Key Factors to Monitor During Tesla’s Q4 Earnings Call:

2024 Delivery Guidance: Investors will closely watch Tesla’s guidance for 2024 deliveries, especially given the company’s growth falling short of the previously mentioned 50% compound annual growth rate (CAGR).

Operating Margin Progress: With operating margins hitting a multi-quarter low of 8% in Q3 due to aggressive price cuts, markets are interested in understanding whether Tesla has established a floor for its margins.

Cybertruck Production and Low-Cost Model Update: Any insights on the production ramp-up of the Cybertruck and updates on the teased low-cost model will be significant for market sentiment.

German Plant and Mexico Expansion: Tesla’s temporary production halt in Germany and any financial impact will be discussed, along with insights into the upcoming plant in Mexico amid a challenging macro environment.

Musk’s Compensation: Elon Musk’s recent statements regarding AI product development and his compensation package will likely be scrutinized during the earnings call, considering its potential impact on shareholder dilution.

Tesla Stock Forecast: Analyst Caution

Analysts are adopting a cautious stance on Tesla as the Q4 report approaches. A notable Tesla supporter, Adam Jonas, lowered the target price from $380 to $345, citing challenges in 2024 and a perceived slowdown in global EV momentum. Musk’s demand for a substantial compensation package adds an additional layer of risk, potentially diluting shares for other investors.

Should You Consider Buying Tesla Stock Ahead of Q4 Earnings?

While sentiments are bearish leading up to Tesla’s Q4 report, there may be an opportunity for a post-earnings rebound if the company can impress with its financials and outlook. The recent dip in Tesla stock could be seen as a favorable opportunity for investors who believe in the broader Tesla narrative beyond electric cars, as the company transitions into a prominent player in the field of artificial intelligence, unless Musk decides to pursue AI ventures elsewhere.

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