Delivery information coming in so far for first halve of Q2 is showing demand weakness again. There is data from China, Europe, and VIN data in the U.S. indicated deliveries are definitely going to be way behind 2023 Q2.
They also will be only a little better than Q1. There really at this point should be no more conjecture that "supply chain issues" explained the low deliveries in Q1. It's just simply incorrect.
The demand issue seems further validated by Tesla introducing low interest rate financing.
It will be interesting to see what the financial modelers spit out, but I would imagine automotive earnings will nearly be flat QoQ.
In addition, I think there is the realization happening that FSD subscription increases won't be helping the company financially for quite a while. The 50% cut in FSD subscription prices means that subscriptions will need to
double just to
make back the money lost from the price cut on current subscribers. FSD subscriptions will need to triple or quadruple probably to even have any real subtle effect on EPS. Not happening for a year at least, and that would be if the FSD gets really good, near robotaxi level.
With Megapack growth capacity stalled until 2025 (meaning no huge further gains until 2026) and Semi delayed, we are essentially now waiting to see what net income can be derived from a fully ramped Cybertruck line as the main contributor to incremental earnings in the next 12 months.
For Q4 if I assume a $80k ASP for 3,000 Cybertrucks / week with 20% operating margins, I get about 600 million in operational income (before taxes). So maybe $0.15 in incremental EPS from Cybertruck.
With costs going down from layoffs and some projects slowing and some additional Megapack revenue, maybe we could get a $0.2 to $0.25 increase in EPS by Q4. Maybe $0.6 or $0.7.
If we can, maybe the market will model $3.5 in EPS in 2025. With a forward PE of say 50, we would get $175 target share price, which coincidentally is near where we are today.
So I think the stock may oscillate around this price +/- 20% depending on sentiment until we get information that would materially affect earnings projections in 2025.