Tesla's financial report on the eve of the downturn is difficult to stop

In the opening of this week's trading, Tesla's stock price continued to decline, preparing for the earnings report release of the week. On October 23rd, Tesla will announce its latest financial report after the U.S. stock market closes.

With known delivery volumes and the end of the Robotaxi Day event, investors will focus on Tesla's profit margins and electric vehicle demand.

On Monday, Tesla's stock price fell by 0.8%, closing at $218.85, while the S&P 500 Index and the Dow Jones Industrial Average fell by 0.2% and 0.8%, respectively.

Since the earnings report on July 23rd, Tesla's stock price has fallen by about 10%; since the Robotaxi Day on October 10th, the stock price has also fallen by about 7%.

The second-quarter earnings report did not meet expectations, with Tesla reporting earnings per share (EPS) of 52 cents and sales of $25.5 billion, while Wall Street expected EPS of 61 cents and sales of $24.5 billion.

During the Robotaxi Day event, investors hope to learn more about how Tesla can improve its driving assistance software to achieve full self-driving of vehicles.

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According to FactSet data, Wall Street expects Tesla's EPS for the third quarter to be about 59 cents, with sales of $25.4 billion, while Tesla's EPS for the same period last year was 66 cents, with sales of $23.4 billion.

Tesla delivered about 463,000 vehicles in the third quarter, higher than the 435,000 vehicles for the same period last year.

The operating profit margin for the third quarter of 2023 was 7.6%, while for the second quarter of 2024 it was 6.3%. Slowing sales growth, high production costs of the Cybertruck, and higher incentives have dragged down Tesla's profitability.

It is crucial for the company to demonstrate an improvement in profit margins. Wall Street expects Tesla's operating profit margin for the third quarter of 2024 to reach about 8%.The demand for electric vehicles is equally important. Dan Ives, an analyst at Wedbush, wrote in a report on Monday, "It is expected that Musk will discuss the demand outlook for the fourth quarter and 2025," and noted that the Chinese market is heating up, while demand in the United States seems to be stabilizing.

According to FactSet data, Wall Street expects Tesla to deliver about 490,000 vehicles in the fourth quarter, which would set a record. The full-year delivery volume is expected to be around 1.8 million, on par with 2023. By 2025, analysts predict that deliveries will soar to about 2 million.

Ives has a "buy" rating on Tesla's stock, with a target price of $300.

The performance of profit margins and management's expectations for profit margins for the remainder of 2024 will largely determine the direction of Tesla's stock price in the coming weeks.

As of the beginning of trading on Monday, Tesla's stock price has fallen about 11% since the beginning of the year, with slowing sales growth affecting investor sentiment.