Tesla earnings are coming Wednesday. Here’s what top analysts expect

Tesla is expected to report a challenging Q2, with LSEG-surveyed analysts forecasting a 21% EPS decline to $0.41 and an 11% revenue drop to $22.62 billion, following a 14% decrease in vehicle deliveries and prior Q1 misses. Wall Street remains split, with many major banks maintaining cautious ratings citing deteriorating auto fundamentals, margin pressures, and potential delays for new models. However, some analysts highlight potential upside from the robotaxi narrative, FSD developments, and future low-cost vehicle launches, balancing the near-term headwinds.

Analysis

Tesla approaches its second-quarter earnings report facing significant headwinds and a divided Wall Street. Consensus estimates from LSEG forecast a material downturn, with earnings per share expected to slump 21% to $0.41 and revenue projected to decline over 11% to $22.62 billion year-over-year. These expectations are anchored by a reported 14% drop in Q2 vehicle deliveries and follow a first quarter where the company missed estimates and saw automotive revenue fall 20%. The analyst community is split, with 23 of 53 analysts rating the stock a buy or strong buy against 20 holds. Cautious firms like UBS, which rates the stock a sell, point to fundamental overvaluation, deteriorating auto business fundamentals, and potential negative estimate revisions. Similarly, Barclays anticipates weak Q2 fundamentals and a more significant volume decline in 2025, potentially exacerbated by a delay in the low-cost model. Conversely, the bull case hinges almost entirely on the long-term technology narrative. Analysts at Piper Sandler and Stifel argue that positive developments in Full Self-Driving (FSD) and the robotaxi initiative, such as service validation outside of Austin, could overshadow near-term financial weakness and support a higher valuation multiple.

Key Decisions for Investors

• Given the consensus forecast for a 21% earnings slump and an 11% revenue decline, investors should closely scrutinize Q2 automotive gross margins and any downward revisions to the full-year delivery guidance.
• The investment case is increasingly polarized between current fundamentals and future potential, so traders should weigh management's commentary on the robotaxi and FSD timeline against the reported weakness in the core auto business.
• Pay close attention to any updates on the timing of the lower-priced vehicle, as multiple analysts have flagged its potential delay to late 2025 as a key risk to future volume and growth estimates.
• With analysts sharply divided and the stock described as a 'story-narrative-momentum-meme stock,' investors should anticipate significant post-earnings volatility, as the stock's direction will likely be determined by whether the market prioritizes weak financials or optimistic technology promises.