"The most important chapter begins now": what's Wall Street worried about ahead of Tesla's report?

Analysts are expecting strong results from Tesla after the electric car maker reported record deliveries for the past quarter in early October. The surge in demand for Tesla has been fueled by the looming expiration of tax credits for the purchase of such vehicles, but the company may struggle in the current quarter. Amid a slowing electric car market, investors will focus on the strategy of Elon Musk, who aims to turn Tesla from a carmaker into an AI player, betting on robotaxis and humanoid robots.

In the report for the third quarter, which Tesla will publish on October 22 after the close of major trading in the U.S., the company will show strong results, Wall Street analysts expect. Their hopes are connected with the activation of demand for electric cars - U.S. buyers were in a hurry to take advantage of tax benefits, which expired in September, Bloomberg reports.

Analysts forecast that Tesla will report revenue growth of 17% quarter-on-quarter to $26.4 billion, MarketWatch writes, citing FactSet data. Adjusted EPS is expected to be $0.55, according to consensus estimates - 38% higher than the quarter before, but 24% lower year-over-year. Net income is projected at $1.8 billion, up from $2.2 billion in the third quarter of 2024. The drop in Tesla's profit is not unexpected - the company's results have been declining for several years in a row, while its shares continue to rise in price, Bloomberg notes.

In early October, Tesla reported record third-quarter deliveries of 497,099 vehicles against Wall Street forecasts of 456,000 units. Model Y and Model 3 accounted for the bulk of sales, while Model X, Model S and Cybertruck deliveries totaled less than 16,000. However, as the incentives expire, Tesla may struggle as demand for electric cars begins to decline, MarketWatch said. To retain buyers, the company introduced new, more affordable versions of its models, but their cost has been higher than expected, the portal recalls.

Investors and analysts are focusing more on Tesla's plans and Elon Musk's vision, MarketWatch notes. Market participants will be interested not only in whether the company will be able to maintain its dominance in the electric car market, but also whether it will be able to redirect traders' attention from electric car sales to Tesla's future as an artificial intelligence company that relies on autonomous driving and humanoid robots.

"The Tesla story has never been about the current quarter, but about the broader expectation that the company can continue to innovate and grow into the future," said Daniel Newman, CEO of research firm Futurum Group, as quoted by Bloomberg.

"We remain firmly convinced that the most important chapter in Tesla's growth story begins now, with AI," says well-known Wall Street techno optimist Dan Ives, an analyst at Wedbush. He believes Tesla could increase its current valuation from $1.5 trillion to $2 trillion by early next year and to $3 trillion by the end of 2026 thanks to the mass production of robot cabs.

However, not everyone is so optimistic. While Tesla's accomplishments are impressive, Musk may be "over-promising" and creating "unrealistic expectations" about the short-term growth of the robotaxi network, according to CFRA Research analyst Garrett Nelson. He added that he sees "too much risk" of lawsuits in accelerating the launch of the robotaxi program nationwide, prompting him to downgrade Tesla's stock from a "hold" advisory to a "sell" rating last month.

"The market clearly sees Tesla as more than just a car company," Mark Malek, chief investment officer at Siebert Financial, told Bloomberg. - But at the end of the day, it's an automaker. I would have a much easier time valuing it if it were purely an AI company."

"While companies like Microsoft and Nvidia are already making money from AI, Tesla's valuation is based on what it can become - through autonomous driving and robotics," said Roundhill Financial CEO Dave Mazza. - And it's this gap between vision and realization that will determine the next stage of its development."

Some analysts believe that the company's electric car shipments could plummet as early as this month after its plan to release cheaper models was met with little enthusiasm. For example, Barclays' Dan Levy estimates Tesla's fourth-quarter sales will be about 425,000 vehicles, compared with the Wall Street consensus of 448,000 units, Bloomberg notes.

"Fourth-quarter sales look weak. Perhaps the expression 'going off a cliff' describes the situation best," warned Bloomberg Intelligence analyst Steve Maine.

This article was AI-translated and verified by a human editor