What investors need to hear from Tesla this week: Morning recap

This article first appeared in Morning Brief. Get the Morning Summary delivered directly to your inbox Monday through Friday by 6:30 a.m. ET. Ordered

Monday, January 23, 2023

Today’s news is from Brian Sozzian editor in chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and more LinkedIn. Read this and more market news on the go with Yahoo Finance App.

Last week at Davos, Elon Musk did not appear in a conversation – with or without audio recording – between any of the more than 75 business leaders I spoke to at the press conference. World Economic Forum.

Even a few drinks at evening cocktail parties do not mention Musk. That’s despite Musk trying to squeeze in the annual event with antagonistic tweets.

The bottom line is that the stock market and American Business don’t revolve around Elon Musk, Twitter, Tesla, SpaceX, The Boring Company or anything else associated with super-billionaires.

Tesla Founder, Elon Musk, Attends Offshore Northern Seas 2022 in Stavanger, Norway on Aug. 29, 2022. NTB/Carina Johansen via REUTERS ATTENTION EDITOR - THIS IMAGE SUPPLIES BY THIRD PARTY .  WE ARE OUTSIDE.  NO COMMERCIAL SALE OR EDITORIAL IN Norway.

Tesla founder Elon Musk attends Offshore Northern Seas 2022 in Stavanger, Norway August 29, 2022. NTB/Carina Johansen via REUTERS

But this week, Tesla’s earnings report to be released after the close of trading on Wednesday is sure to draw attention to the core of Musk’s business empire.

And for Tesla stock to go up, I think two things need to happen.

The first is that investors must get clear guidance from Musk on how long the recent global price drop will last.

Tesla Recall discount of the base Model 3 from $3,000 to $43,990 earlier this month. The Model 3 Performance variant has dropped the price from $9,000 to $53,990. For the Model Y Long Range, the price has dropped $13,000 to $52,990. The Performance model has dropped to $56,990, about $13,000 cheaper than its previous price.

US sale becomes hot after recent discounts in China, Japan and South Korea as Tesla seeks to rekindle demand in the face of growing competitive threats. As long as the market believes Tesla will use price cuts to stimulate demand, the stock is likely to come under pressure as investors try to model 2023 earnings for the electric carmaker. .

Second, the market needs to know Tesla’s actual unit output growth and be comfortable with that.

Tesla has guided investors to grow unit volume by about 50% by 2022 — the actual figure is 39%. I’m hearing the numbers whisper this year about 25% to 30% unit volume growth. Tesla would be wise to forecast something at the lower end of that range and set the stage for breaking through that guidance.

I think investors will welcome this week’s conservatism from a management team that tends to be wildly bullish.

The high standard of Tesla pleasing the market on both these accounts.

On Wednesday night, be sure to tune in Yahoo Finance Direct — on our homepage, app, YouTube, etc. — right after the Tesla earnings call ended for the evening. your real and Brad Smith will provide instant, actionable analysis of Tesla earnings calls, and can sip happy hour drinks while doing so.

In the meantime, Happy trading!

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