Tesla Q1 earnings: What investors will be watching for

Tesla (TSLA) is gearing up to release its highly anticipated first-quarter earnings report on Tuesday, April 23rd. Analysts are bracing for the electric vehicle giant to report its first revenue decline in nearly four years, reflecting the mounting challenges and intensifying competition in the automotive industry.

Yahoo Finance's Pras Subramanian breaks down the details, providing insights into questions surrounding Tesla's future endeavors, particularly its robotaxi and Model 2 initiatives.

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This post was written by Angel Smith

Video transcript

- For more on what to expect from tomorrow's big report, we bring in Yahoo Finance's Pras Subramanian. Pras, what should we expect?

PRAS SUBRAMANIAN: Yeah, so big picture stuff, right. Adjusted EPS, $0.52 a share. Top line revenue, 22.3 billion. All sounds nice, right? But that'd be the first revenue decline in four years for Tesla, quarter-over-quarter.

And they're up a $1.5 billion in operating profit. 40% slide from a year ago. So you're seeing some serious damage here, potentially, compared to how they're growing historically over the last year or two to three or four years. Now, we're seeing a little bit of a drawback here.

We already had that big miss in deliveries that we saw. Big difference between production and actually sales. So what's going on there with that buildup? Are we going to hear more about, potentially, EV demand issues? Is Musk going to say, it's all about price. It's all about price. We've got to get cheaper then we'll sell everything. So we'll hear more about that. Not sure, but we'll see.

But then also, the big picture is product roadmap. Is that model to that smaller, cheaper EV truly dead, like Reuters has reported? And Musk said they were lying. But then actually-- but didn't actually address the fact, is it really dead or not?

Instead, saying the robotaxi is going to come out-- we're going to see it on August 8. [INAUDIBLE] going we see a real car or a drawing? What's it going to have inside? Pedals, no pedals? Steering wheel, no steering wheel? That's the kind of thing that, I think, people are asking about.

- If I was-- we were just talking to Josh Schafer about this though, Pras. If I was a Tesla investors, I mean, this talk has gotten rocked this year. I'd want some hard concrete details about everything you just mentioned. I mean, do you think I get that tomorrow?

PRAS SUBRAMANIAN: I don't think he will. I think if Musk truly-- he doesn't seem to care about the stock price. But if he does, he might actually say, you know what? They might show a drawing or a picture of the robotaxi and the shareholder deck tomorrow. Maybe we'll hear some--

- I don't know. Do you think a drawing gets done like a watercolor print that's--

- Something. I mean, it's a design sketch right? But if we hear that and we also hear something about like, oh, that model 2? Can't talk about that but we are working on a cheaper vehicle. Something like-- just give them something.

- Well, there--

PRAS SUBRAMANIAN: If it's true.

- Right, the Wall Street notes I've been reading, it seems like there's a risk that Musk is pivoting towards these robotaxis rather than focusing on those more affordable cheaper EV models. What have you been hearing from analysts and investors on the street, when it comes to some of those potential risks? If that is the case. If there is a complete pivot to robotaxis.

- Most of them believe-- most of them believe that the model 2 is not going to happen. This cheaper car is on hold, for whatever reason, and it changes the investor thesis of this-- I keep doing this. Changes the invest thesis of the stock. And they think that it's going to be a turnover.

One of them is going to be a turnover and shareholding class. It's going to be people who believed in the model 2 were going to be kind of getting out. And people that are buying into the long-term AI, Dojo, FSD, robotaxi, kind of Big Ten year picture. Horizon stuff. They're going to be rolling in.

If enough of them will come in then it doesn't really matter. But it seems like there's not. One analyst, John Murphy of Bank of America, said that the model 2 is not dead. He thinks that it's still part of the big picture, part of the thesis of the story. And Tesla had mentioned in Q4 that they were working on it so he thinks that it's still happening. So there is a split but most of them think it's not happening.