Tesla's Q2 Earnings Will Likely Focus on Politics and Robotaxis, But Investors Should Really Watch for These 5 Things
Tesla's Q2 Earnings Estimates
Consensus estimates call for Tesla's Q2 revenues to fall 12.3% year-over-year. The estimates aren't surprising, as Tesla's deliveries, which closely approximate vehicle sales, fell 13.5% year over year in the quarter. The decline was higher than the 13% fall in Q1 and was the worst ever for the company.
More News from Barchart
Dear Google Stock Fans, Mark Your Calendars for July 23
Dear UnitedHealth Stock Fans, Mark Your Calendars for July 29
Peter Thiel Is Betting Big on This Ethereum Treasury Stock. Should You Buy Shares Now?
Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today!
Analysts expect Tesla's Q2 earnings per share (EPS) to fall 33.3% as compared to the corresponding quarter last year. For the full year, the company's EPS is expected to be 34.3% lower than last year.
Tesla's Q2 Earnings Call Could Be About AI and Robotaxis
Tesla's Q2 earnings call could be more about artificial intelligence (AI), robotaxis, and Musk's politics. The company might discuss the Austin robotaxi rollout and provide color its plans to expand the service to other cities. Tesla might also provide an update on its Optimus humanoid robot, which Musk believes is a multitrillion-dollar opportunity. Musk recently floated the idea of Tesla investing in his AI company xAI, and during the earnings call, we might get to hear more about that proposal.
Musk's political activities, including his launch of a new political party, might also be in focus. Notably, the key reason Tesla stock rose sharply after releasing its Q1 earnings despite missing on both the top line and bottom line was Musk's promises of scaling back his political activities. Musk subsequently left the Department of Government Efficiency (DOGE), but instead of pulling back on politics, the world's richest person has doubled down.
5 Things I'll Be Looking for in Tesla's Q2 Report
Outside of AI and robotaxis, these are the things I'll be listening out for:
Update on the Low-Cost Model: Tesla had previously said that it would commence production of its affordable model in the first half of 2025, but so far, we don't have any official update. During the Q2 earnings call, I will watch for an update on that platform.
2025 Delivery Guidance: With the electric vehicle (EV) tax credit set to end in September, the demand environment for the U.S. EV industry might only deteriorate. During the Q2 earnings call, Tesla might revisit its 2025 delivery guidance as the probability of yearly growth in deliveries looks bleak, even as I expect a bump in Q3, as buyers might rush to leverage the tax credits before they phase out in Q4.
Cybertruck: The deliveries of Tesla's Cybertruck pickup have underwhelmed, and the model is far from being a success story. Tesla started trade-ins for the uniquely shaped vehicle earlier this year, but the depreciation rates were reportedly too high. During the Q2 earnings call, I will watch for any discussion on the model that has failed to live up to expectations.
Energy Business: Tesla's Energy business has reported a sequential fall in deployments for two consecutive quarters. I will watch out for any discussion on the Energy business, which Musk once said has the potential to be even bigger than the automotive business.
Margins and Profitability: Tesla's once industry-leading margins have withered away amid the price war that it initiated with its massive price cuts. The company's lucrative regulatory credit business also faces strains now as the One Big Beautiful Bill Act eliminates the penalties for non-compliance with Corporate Average Fuel Economy (CAFE) standards. Amid sagging profitability, sales of regulatory credits were a silver lining for Tesla, and if not for these, the company would have posted a GAAP loss in Q1. William Blair analyst Jed Dorsheimer estimates that sales of three-fourths of Tesla's regulatory credits were linked to CAFE standards. That revenue stream is now at risk as automakers don't necessarily need to buy these regulatory credits from Tesla to meet the standards. I will be watching for commentary on regulatory credits as a result.
Pre-Q2 Earnings Forecast for Tesla Stock
Sell-side sentiment towards Tesla is not quite bullish heading into the confessional, and last week, Mizuho and Goldman Sachs lowered their target prices while maintaining their respective ratings. William Blair went a step further and downgraded the stock from an 'Outperform' to 'Market Perform.' Tesla is trading above its mean target price of $296.59, which is something that's not uncommon for the Elon Musk-run company.
All said, given Tesla stock's propensity to react to Musk's commentary and other non-fundamental factors, I would refrain from betting against TSLA even as it is among the most shorted stocks heading into the Q2 confessional. While I expect the stock to react positively to the report, as many negatives have been factored into it after the recent fall, I still won't add any Tesla shares, given the valuations and the slowdown in the core automotive business.
On the date of publication, Mohit Oberoi had a position in: TSLA. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


CNN
23 minutes ago
- CNN
On Tesla's earnings call, no one wanted to talk about … Tesla's earnings
A version of this story appeared in CNN Business' Nightcap newsletter. To get it in your inbox, sign up for free here. If you happened to glance at Tesla's second-quarter earnings report Wednesday night, you might not be surprised that the company's stock was getting pummeled on Wall Street Thursday morning. Put simply: sales are in freefall, profits have been shrinking for three straight quarters and the US government is about to cut off a crucial revenue stream. But if you just listened in on the company's call with analysts, you would have no idea why. For an earnings call, there was zero talk of, um, earnings. And the overall message from Tesla's top brass seemed to be: We are a robotics and AI company, and, someday soon, it's going to be awesome. For now, many bullish analysts — especially those whom the company called on during the conference call — are on board with CEO Elon Musk's vision of Tesla as an AI and robotics company first and an organization that builds and sells cars that people purchase and drive themselves second. But Thursday's selloff suggests that Musk's 'hey, look over here!' comms strategy is getting harder for Wall Street to swallow. ICYMI: CEO Elon Musk did acknowledge in response to one question that Tesla was in a 'weird transition period' and 'could have a few rough quarters' ahead because of the loss of a $7,500 tax credit for US EV buyers starting in October and the vanishing market for regulatory credit sales, which has driven a significant portion of Tesla's profits for years. But over the course of an hourlong call, Musk barely mentioned Tesla's core business — selling cars, which, as my colleague Chris Isidore reports, isn't going great. Musk kept his gaze firmly on the far horizon, skipping over the fact that demand is cratering for the things Tesla actually sells right now, while touting dreams of a still largely hypothetical future where the company would build and sell more than a million humanoid robots. And for the most part, the analysts who were called on to ask questions followed suit, opting not to dwell on the declining financials of the world's most valuable automaker. Analysts' questions largely focused on robotaxis, Tesla's 'Full Self Driving' software, the Optimus robot and other products that are, again, still largely unrealized as viable consumer products. 'The company offered remarkably little detail on some of the most important factors' — like its mysterious new lower-priced model —'making our outlook lean more on imagination than realistic targets,' said Truist's William Stein, who has a hold rating on Tesla, in a note after the call. Even Dan Ives of Wedbush Securities, known as Tesla's biggest cheerleader on Wall Street, said Tesla management's performance was a letdown. 'I wouldn't say it was a conference call that should be put in the Hall of Fame,' Ives told CNN on Thursday, while underscoring he is still bullish on Tesla's robotics future with Musk at the helm. 'Communication on the call was less than stellar in terms of details, and I think that definitely played into the selloff that we're seeing.' Tesla shares (TSLA) fell more than 8% Thursday. For Tesla's detractors, Musk's opaque responses confirmed what they've long seen as an overvalued company that's banking on hype. 'The stock price no longer rests on selling cars. It hinges almost entirely on the promise of a robot-driven, self-driving future… one that continues to recede on contact with reality,' said analyst Gordon L. Johnson, one of Tesla's biggest critics on Wall Street, in a note. 'The key to convincing the market that you're not just a car company is to avoid discussing your car business… If you're trying to justify a trillion-dollar valuation while your core business stagnates, it helps to keep the details as fuzzy as the timeline for your next 'miracle product.'' But to a certain extent, this is who Musk is and who he has always been. The focus, he believes, shouldn't be on what Tesla is doing now. It should always be on what Tesla is going to do, someday. Someday soon, Tesla is going to build and sell an inexpensive car. Someday soon, Tesla is going to build and sell hundreds of thousands, if not more than a million, Cybertrucks. Someday soon, Tesla is going to build and sell a car that drives itself, from coast to coast. Someday soon, Tesla is going to be an AI and robotics company. If it isn't one now, you're just focused on the wrong things. And if it isn't one tomorrow, then you just need to hear about what it's going to accomplish, someday soon.

Business Insider
23 minutes ago
- Business Insider
Top strategist Vincent Deluard predicts a summer slump in stocks — but says 'recessions have been canceled'
The record-breaking stock market will tumble before September, but a recession effectively is "canceled," a leading strategist told Business Insider. "I expect US stocks to experience a sharp but brief correction in the summer," Vincent Deluard, the director of global macro strategy at StoneX, a financial services network, told BI in an interview. In a recent note, Deluard raised the prospect of a "brutal but brief" sell-off in late July or early August. He based the call on Donald Trump's tariff-negotiation period ending on August 1 and potentially spooking markets; the likelihood of further interest-rate cuts being delayed because of accelerating inflation and a tightening labor market; and the narrow breadth of the latest market rally, he said, adding that narrow rallies often lead to a correction within a month. He added in his note that foreign investors were anxious about "Trump's antics" with tariffs, the deficit, and their exposure to the US economy. He predicted selloffs would be short-lived as overseas buyers can't resist Big Tech stocks given their dominant market positions and central roles in the AI revolution. Deluard told BI he expects "several steep corrections" in stocks over the next two years due to "erratic policymaking, pressure from rising long-term bond yields, and selling from foreign investors." 'Recessions have been canceled' The macro specialist told BI there was a risk of a "brief stagflationary slowdown," but he ruled out a prolonged downturn as "recessions have been canceled by the shift to intangible assets, permanent stimulus, and demographics." Deluard spelled out his thinking in a note in May. He highlighted that the US economy has spent just 1% of the past 16 years in recession, down from around 40% of each decade between the 1860s and 1930s. He added that the main changes were a transition from an industrial economy to a less volatile services one, big rises in government spending on healthcare and social support programs for an ageing population that have acted as a "permanent economic stimulus," and policymakers adopting a "whatever it takes" approach to avoiding recessions. Deluard told BI that the Federal Reserve might have to raise its inflation target from 2% to as much as 4%, because officials will realize they can't aim lower in an era of sustained deficit spending. He said that that would be "quite positive" for stocks, as it would support higher corporate earnings and lower interest rates. Deluard, an adjunct professor of finance at Saint Mary's College of California, told BI the housing market would likely remain weak due to "poor affordability, growing supply, and high and sticky mortgage rates." He suggested house prices would "cool down but not crater" over the next two years, buoyed by higher construction costs, rising incomes, and low unemployment.

Business Insider
23 minutes ago
- Business Insider
A new type of dealmaking is unnerving startup employees. Here are the questions to ask to make sure you don't get left out.
As a new kind of dealmaking is sweeping Silicon Valley, forcing employees to be vigilant about how much trust they are willing to put in startup founders. Over the past two years, instead of acquiring AI startups outright, Big Tech companies have been licensing their technology or making deals for top talent, with startup employees sometimes getting divided into separate camps of haves and have-nots. Those with the most desirable AI skills reap a windfall while those who remain are shrouded in uncertainty. That recently happened to Windsurf employees after the AI coding company was on the verge of being acquired by OpenAI for $3 billion, but was instead split in half. Google paid billions to hire Windsurf's CEO and top talent, and the hundreds of employees who remained were bought by another startup, Cognition. Unfortunately for startup employees, many investors expect these kinds of novel transactions to continue as the velocity of developments in AI makes companies unlikely to want to wait months or years for regulatory approval. Candidates need to ask tough questions about the founder Given traditional M&A has mostly gone out the window, it is more important than ever for startup employees to do their homework, advises Steve Brotman, managing partner at Alpha Partners. "In light of what we just saw with Windsurf, it's crucial to understand the ownership dynamics," Brotman said. " You don't want to be working 100-hour weeks only to realize your options are underwater or your exit upside is capped. And remember: companies that are transparent and deliberate about governance tend to be better long-term bets, both for your career and your equity." "Ask hard questions about runway, revenue, burn, and investor syndicate quality," Brotman continued. "Who's on the board? Are they structured for long-term growth or a quick flip?" The most important thing candidates should assess is how much they trust the founder, according to Deedy Das, an investor at Menlo Ventures. "Nobody wants to talk about the fact that founders control almost everything that happens in a company, including how you get paid, when you get paid, how the equity vests, and when you can sell the equity," said Das. "It's everything, so having trust in your founder to do the right thing by the team is extremely important." Just as investors would typically research a founder before writing a check to one of their many portfolio companies, prospective employees should ask around about founders whom they could be tied to for years, said Hari Raghavan, cofounder and CEO of Autograph. "They should be doing diligence on whether this is a standup person," said Raghavan. "Do your best to suss out, 'Are these guys going to take care of me?'" Raghavan suggests that founders should sign a written pledge agreeing to treat employees well in terms of stock options and exit scenarios. "These are things that any good founder should be doing, and the vast majority of good ones do, but I think even just establishing that set of rules is a good idea," he said. Prospective employees should not be afraid to "interrogate" a founder on how they are thinking about an exit, according to Jake Saper, a general partner at Emergence Capital. "Ask founders how they would weigh staying independent, a classic acquisition, or a licensing deal that carves out key people," Saper said. "Their answer tells you a lot about the journey you're signing up for." Scrutinizing the fine print has also become more important, said Saper. "Make sure offer letters and stock agreements spell out vesting acceleration, treatment of options, and retention bonuses if only 'substantially all' of the team moves," Saper said. "Those clauses mattered at Inflection and Windsurf, and they will matter again." In 2024, Microsoft hired the founder of Inflection AI, Mustafa Suleyman, and some of the startup's staff to help lead its AI efforts. In June, Meta paid $14 billion for a 49 percent stake in the data labeling company Scale AI and hired its founder, Alexandr Wang, to run its Superintelligence group. Meta also hired some of the startup's researchers. Last week, Scale AI laid off 14% of its workforce, or 200 employees, and revealed it is unprofitable. Finally, Saper says to take a hard look at the underlying business model of a startup to make sure it can last. "Startups with unique data feeds, embedded distribution or clear recurring revenue have leverage to stay independent," Saper said. "If a company's main asset is a brilliant but portable research team, you should assume Big Tech will come knocking."