I listened to Tesla’s Q3 2023 earnings call and thought it was probably the worst TSLA earnngs call I’ve ever heard. For the first time ever, Elon Musk appeared unsure about the future of Tesla and kept complaining about the macro-economy affecting the sales of Tesla EVs.
Q3 2023 Tesla Earnings Analysis
Here’s a quick rundown of everything my thoghts on Tesla stock right now and whetheir it’sa buy, sell, or hold.
- Declining Operating Margins: Tesla’s operating margins hit 7.9% in Q3 2023 and continue to trend lower QoQ. This is a bad sign because it shows how the EV pricing war has affected net income and free cash flow.
- Loss of Zachary Kirkhorn: Former CFO Zachary Kirkhorn stepped down as CFO in August 2023 after 13 year tenue with the company. I think his presence was underestimated and I missed his confident replies during this call.
- More Competition: Tesla has dropped prices several times this year to compete with other EV makers such as Lucid, Rivian, Fisker, and other legacy automakers.
- Falling Market Share: Tesla’s US market share dropped to 50% in Q3 2023 and shows that consumers are choosing other EVs.
- HODLing Bitcoin: Tesla did not sell any of its 10k+ Bitcoin holdings, which is a very bullish sign for crypto.
- Decreasing Free Cash Flow: Elon Musk discussed how important free cash flow was to the company and it’s been trending downwards due to declining net income and free cash flow.
- Strong Balance Sheet: Tesla added $3 billion in cash to increase its cash on hand to $26.1 billion. This is a good sign because Tesla can earn interest on its cash holdings due to high interest rates.
- Cybertruck Launch Date: Elon Musk touched on the Cybertruck launch date for November 30th, 2023. Mark your calendars.
My Current Tesla Stock Rating: Hold
We first posted about Tesla in 2013 and have remained bullish on the company for the last 10 years.
This is a challenging time for Tesla because EV supply is building up despite record % of EV sales in America. The company is doing a good job of holding onto cash but it looks like operating margins will continue to decline in the short run.
The good news is that TSLA looks like a buy on the daily RSI of 31 if you’re looking to buy the dip.
I see nowhere to panic sell TSLA stock if you are a long-term holder. Otherwise, let’s wait and see how Q4 2023 plays out.