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Tesla Q2 earnings preview: It's all about demand

FREMONT, CALIFORNIA - APRIL 20: A sign is posted in front of a Tesla service center on April 20, 2022 in Fremont, California.It will be another big quarter for Tesla (TSLA), and the markets overall, when the EV giant reports Q3 earnings after the bell on Wednesday.

Wall Street is expecting Tesla to report:

Q3 Revenue: $22.13 billion

Q3 Adjusted EPS: $1.015

That revenue figure would represent more than a $5 billion jump from Q2, where Tesla experienced COVID-related and operations optimizing shutdowns in Shanghai. Year over year that estimated revenue figure would be a nearly 61% jump from Q3 of 2021.

On the profitability end, Tesla is expected to report adjusted net income and EBITDA figures that are higher than a year go and higher sequentially.

Looking ahead to the earnings call, investors and analysts will be focused on any clues to the demand story for Tesla, which some are concerned might be cooling off in the face of a Fed-induced slowing economy.

“While we believe demand for Tesla products exceeds supply, it would be unreasonable to assume that there is (a) a limit to how much Tesla can continue to increase prices without demand suffering and (b) that the company was not exposed to decelerating macroeconomic growth,” Morgan Stanley’s Adam Jonas said in a note to investors two weeks ago.

"A top concern right now is demand in China as wait times seem to be shrinking," RBC Capital Markets said in a note. "Question is if this is a blip or signs of a bigger change among consumers."

Of course Tesla’s production outlook will also be scrutinized, with analysts looking for any change to Tesla’s 50% CAGR (compound annual growth rate) target. The ramp-ups in Giga Berlin and Austin will also be top of mind, as well as whether Giga Shanghai is fully back after its latest idling due to operational improvements.

On the products end, there will be an expectation for CEO Elon Musk and the team to share more information on the rollout of Tesla semi, which Musk said will begin deliveries in early September to Pepsi and whether there will be more updates coming on the Tesla Cybertruck’s industrialization process as well as its future product roadmap.

For others on the Street, in order to stop the free fall in Tesla shares the company must outline a realistic plan for growth, with analysts like Wedbush's Dan Ives saying they're “laser-focused” on its strategy for getting there.

“For Musk the clock has struck midnight for the Street to stop the excuses and noise ... Now is the time to execute on reasonable growth and unit targets into 4Q/2023 and it starts with tomorrow's conference call,” Ives wrote in a note this morning.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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