Tesla’s (TSLA) upcoming fourth quarter earnings report, slated for release on Wednesday after the bell, comes at a time when investors are looking for non-auto business catalysts for the stock.
For the quarter, Tesla is expected to report revenue of $25.11 billion (per Bloomberg estimates), a 2.4% drop from a year ago. Tesla is expected to post adjusted earnings per share (EPS) of $0.45, translating to adjusted net income of $1.59 billion, down considerably from the $2.6 billion reported last year.
Tesla’s drop in sales and profits comes as its bread-and-butter EV business sputters.
Earlier this month, Tesla reported Q4 global vehicle deliveries of 418,227, a 15% drop from the 495,570 vehicles it delivered in the same period last year.
For the full year, Tesla delivered 1.64 million vehicles, in line with expectations and an 8% drop compared to 2024. This marked the second straight year of annual sales declines for the EV maker.
Cheaper vehicles like the standard versions of the Model Y and Model 3 couldn’t blunt several large headwinds. The loss of the federal EV tax credit at the end of Q3 in the US, new EV competition from legacy auto brands, and CEO Elon Musk’s polarizing politics all played heavily into Tesla’s sales slide.
It is no wonder that investors are counting on initiatives like Tesla’s full self-driving software (FSD), robotaxi service, and Optimus robot as future catalysts for the stock.
“The major focus on the conference call will be the Robotaxi rollout across the US including the removal of safety drivers across its fleet, and we believe the Street is at a crossroads with Tesla as the bulls and bears debate how quickly the Robotaxi era will take shape over the coming year,” Wedbush analyst Dan Ives wrote on Tuesday.
Last week, Musk announced that Tesla removed the safety driver from its Austin, Texas, fleet for some vehicles, which Ives called an “important first step in its long-term vision for the Robotaxi.”
Other major questions surround robotaxi rollouts in new regions such as Arizona and Nevada, as well as ultimate fleet size. Morgan Stanley predicts 1,000 Tesla robotaxis on the road by the end of the year.
Musk also announced the one-time fee for FSD would be going away in lieu of a subscription plan, which currently costs $99/month. Tesla also removed its Autopilot lane centering and adaptive cruise control feature in a bid to increase FSD adoption.
“We believe FSD penetration could increase to 50%+ and change the financial model/margins for Tesla looking ahead,” Ives wrote.
Looking further out is Optimus, Tesla’s humanoid robot that Musk once envisioned working in the factories in the not-too-distant future.
“We’d argue that up until now Optimus has been more in a prototype phase. However, to the extent that Optimus expands beyond prototype, with investors viewing it as ‘real,’ this could drive more excitement,” Barclays analyst Dan Levy wrote in a note published on Monday.
Levy added that items to watch for include progress on Optimus v3, whether Optimus is ready to be manufactured on a production line, whether the robot is expanding its capabilities (including additional abilities in manufacturing settings), and when Optimus sales are on the horizon.
Musk said this month he sees Optimus sales starting next year, but the CEO is known for audacious product timelines.
Levy put Tesla’s roadmap, what Tesla needs to deliver on to keep the stock on the rise, in stark terms for investors.
“Tesla is one of two publicly traded companies in North America with a market cap of $100bn+ and a PE ratio of more than 125x. And so given this value is already in the stock, we believe that for the stock to further outperform, Tesla will need to show clear progress on its efforts in Robotaxi, FSD, and Optimus,” he said.
Pras Subramanian is Lead Auto Reporter for Yahoo Finance. You can follow him on X and on Instagram.
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