Tesla: Possible Margin Compression Ahead


  • While TSLA chose to aggressively cut its prices to chase market share, FQ1’23 might bring unsatisfactory top and bottom line results in our view.
  • Based on our estimates, the company could deliver FQ1’23 revenues of $23.9B (-1.6% QoQ & +27.4% YoY) and EPS of $0.90 (-24.3% QoQ & -15.8% YoY).
  • Naturally, it is entirely possible that TSLA may push out just enough volume to counter the notable gap in margins, due to Shanghai’s projected weekly output of 20K vehicles.
  • However, with the stock already recording a tremendous recovery thus far, we reckon that it may be more prudent to exercise some caution here.

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TSLA’s Potential Margin Compression In FQ1’23 Is A Real Concern

Tesla, Inc. (NASDAQ:TSLA) has reigned king in the global EV market, particularly attributed to the tremendous volume growth and stellar margins thus far.

In FY2022, the company

TSLA 1Y EV/Revenue and P/E Valuations

S&P Capital IQ

TSLA 1Y Stock Price

Trading View

Disclosure: I/we have a beneficial long position in the shares of TSLA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

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