Tesla, Inc's TSLA first-quarter deliveries report is a day away, and given the heavy dose of price cuts the electric maker relied on, investors look ahead to the report with worries regarding margin contraction.
What Happened: Tesla management will likely update the fiscal year 2023 volume guidance from the 1.8-million-unit estimate provided by the company during the fourth-quarter earnings call, said Gary Black, Managing Partner at Future Fund. Incidentally, CEO Elon Musk hinted at hitting 2 million units.
The company also penciled auto gross margin in the 20% range.
Black said he expects both numbers to be updated. "My sense is both estimates may come down given TSLA's declining order backlog and Elon's affordability narrative," he said.
Tesla may not officially guide down but will likely talk gross margin estimates down under the narrative of affordability, he added.
See Also: Everything You Need To Know About Tesla Stock
Why It’s Important: Musk said over the weekend the need for improving affordability of vehicles in order to sell at scale to absorb fixed costs and improve production.
Black still thinks Tesla will likely beat the Street estimate for earnings per share. Analysts, on average, estimate EPS of $0.86, down from the year ago's $1.07, and revenue of $23.34 billion, up 24.4% year-over-year.
Tesla closed Monday's session 1.10% higher at $187.04, according to Benzinga Pro data.
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