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Earnings Outlook: Tesla earnings: Wall Street worries about China shutdowns, Musk’s Twitter distraction

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Tesla Inc. is slated to report first-quarter earnings after the bell on Wednesday, with investors zeroing in on production in China and also worrying whether Chief Executive Elon Musk would divide his attention further with his bid for Twitter Inc.

Tesla
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executives will host a conference call with analysts and others after the results at 5:30 p.m. Eastern. That call will be webcast.

It is unclear if Musk, who roiled markets in recent days with a $43 billion buyout offer for the social-media company, would attend the conference call and take questions.

Related: Twitter gave rise to Elon Musk’s fame, and amplified his ideas

Musk said last year he’d only be present at conference calls if he had major news to share. The CEO was on the call after fourth-quarter results, when he gave a new timeline for autonomous Tesla vehicles and other updates, but skipped the third-quarter call.

Here’s what to expect:

Earnings: The FactSet consensus calls for Tesla to report adjusted per-share earnings of $2.26 for the quarter. That would compare with adjusted earnings of 93 cents a share in the first quarter of 2021.

Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted profit of $2.47 a share for Tesla.

Revenue: The analysts polled by FactSet are calling for sales of $17.6 billion for Tesla, which would compare with $10.4 billion in the first quarter of 2021. Estimize is expecting $18 billion in revenue for the quarter.

Stock price: Tesla shares have outperformed the broader index, gaining 33% in the past 12 months compared with gains of around 5% for the S&P 500 index.
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What else to expect: Ongoing lockdowns in Shanghai, China, have raised concerns about Tesla’s factory there.

Tesla’s curtailed production will have held back results in the quarter and also will affect the current quarter, said Chaim Siegel with Elazar Advisors.

Issues in China have hit other auto makers as well, with Chinese EV maker Nio Inc.
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recently warning of delivery delays given the COVID-19-related production suspensions.

The Wall Street Journal reported Friday that Tesla and other auto makers were moving to restart plants in Shanghai next week, citing people familiar with the matter. More Chinese cities tightened their pandemic restrictions in the meantime.

“Operations at Tesla Shanghai Gigafactory have been intermittently suspended since late March, resulting in a production capacity loss of at least 24,000 units,” analysts at Rystad Energy said in a recent note.

See also: Global PC sales fall in Q1, Gartner and IDC say, but demand remains mostly strong

On the battery material supply chain, the “challenging logistics” continue, delaying deliveries of various battery metals both on the domestic market and abroad, as well as materials required for processing, the Rystad analysts said.

Elazar’s Siegel is also keeping a close eye on Tesla’s auto gross margins and its average selling price, which has been moving up for the last two quarters to offset rising costs and supply-chain problems.

One thing Siegel does not expect to hear on Wednesday: Any issues with demand for Tesla EVs.

“I’m shocked if there’s a demand problem,” he said. Tesla has what’s called a “high class” problem, too much demand that it can’t meet.

Tesla recently gave more details about a new variant of the Model Y compact SUVs being produced at its Texas factory, which comes with Tesla’s proprietary 4680 batteries. That model is a standard range all-wheel drive, starting at about $60,000, analysts at Deutsche Bank said.

“Thus far, the EV maker has delivered just 20 units to employees, but we expect that number to pick up considerably in the weeks ahead before orders open up to the general public,” the analysts said.

Then there’s Musk bid for Twitter
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Tesla shares fell 4% in the abbreviated week due to the Good Friday holiday, compared with a 2.1% loss for the week for the S&P.

Musk “has proven proven that he’s able to juggle more balls in the air than the next guy,” Siegel said. “I don’t think that will take (Musk’s) eyes off the ball for Tesla.”

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