Daily Brief - Tesla's earnings take a detour

TLDR: Tesla's latest earnings report has the financial world buzzing, but not for all the right reasons. It's a tale of tempered sales forecasts, shrinking profit margins, and Elon Musk's intriguing new power move.

The electric vehicle giant, after achieving record-breaking deliveries and expecting revenue of $25.88 billion, is now facing a slowdown in sales growth. Tesla warns of "notably lower" vehicle sales growth in 2024, citing challenges such as supply chain disruptions and increased competition.

The company's gross profit margin took a hit, dropping to 17.6%, a 6.2 percentage point fall from the previous year, largely due to aggressive price cuts and rising costs

Elon Musk's recent quest for more control over the company adds another layer to this complex story. Currently holding a 13% stake, Musk is pushing for 25% voting control, linking his ability to lead Tesla's AI and robotics ventures to this increase in share ownership.

This bold move follows Musk's substantial sale of Tesla shares in 2022 to acquire the social media platform X, previously known as Twitter.

Despite these headwinds, Tesla's Cybertruck is gearing up for increased deliveries this year, and the company's energy storage business is projected to outpace automotive revenue growth.

Additionally, Tesla's controversial "Full Self-Driving" software continues its rollout, though Musk acknowledges that other automakers are yet to be convinced of its viability

Market Movers: When Tesla stock drops?

Here is the historical response from EV stocks on a median basis after historically large one-day drops in Tesla stock:

1. Li Auto ADR (Ticker: li) - 1-month return: 16.67%
2. Tesla Inc (Ticker: tsla) - 1-month return: 13.48%
3. Rivian Automotive Inc (Ticker: rivn) - 1-month return: 6.81%
4. Polestar Automotive Holding UK PLC (Ticker: psny) - 1-month return: 6.34%
5. XPeng Inc (Ticker: xpev) - 1-month return: 5.98%
6. General Motors (Ticker: gm) - 1-month return: 4.70%
7. Toyota Motor ADR (Ticker: tm) - 1-month return: 1.81%
8. Ford (Ticker: f) - 1-month return: 1.57%
9. Fisker Inc (Ticker: fsr) - 1-month return: 0.86%
10. NIO Inc (Ticker: nio) - 1-month return: 0.52%
11. Volvo AB ADR (Ticker: vfs) - 1-month return: 0.31%
12. Lucid Group Inc (Ticker: lcid) - 1-month return: -1.97%

Earnings Update: Visa reports tonight

Analysts expect Visa to report a 6.9% increase in earnings from the previous year and revenue growth of 7.1%, suggesting a positive outlook for the company's financial performance in the quarter.

Visa's earnings are expected to be influenced by several factors, including growth in cross-border volume, processed transactions, and payment volume. The heightened spending in travel and entertainment sectors, along with the ongoing adoption of digital payment methods, are likely to be key contributors.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: Pessimistic forecasts pre earnings

Toggle's analysis of 8 previous instances where analyst forecasts for Alphabet were pessimistic show that such events were typically followed by a median increase in the stock's price over the subsequent three months.

Alphabet's broad range of revenue sources beyond its core search business, such as YouTube and Google Cloud can give the company buffer against downturns in a single area. Let's see what happens on the 30th.