Tesla’s Earnings at Risk as Price Cuts Continue, Says Goldman Sachs

Goldman Sachs has expressed concerns that further price cuts by Tesla could hinder the company’s earnings. In a note released on Sunday, the financial firm lowered its adjusted earnings per share estimates for Tesla in 2023 and 2024, while maintaining a neutral rating and a price target of $275 per share.

Analyst Mark Delaney predicts that Tesla’s earnings for the remainder of 2023 and into 2024 will be $2.90 and $4.15 per share, respectively, down from previous estimates of $3 and $4.25 per share. Delaney attributes this downgrade to Tesla’s focus on increasing production, which he believes will continue to impact gross margins, after accounting for vehicle incentives and tax credits.

Delaney also suggests that Tesla may further decrease prices in 2024 to support higher volumes, which could mitigate the benefit of cost reductions on earnings per share. Despite these concerns, Delaney acknowledges Tesla’s position as the dominant electric vehicle maker in the market, which mitigates some of the near-term headwinds.

Goldman Sachs’s neutral rating reflects the expectation of margin challenges in the short to intermediate term. However, the firm also recognizes Tesla’s strong leadership position in the industry and its long-term growth potential. This includes opportunities in software, services, and related markets like Energy.

While Tesla’s stock has experienced significant gains of over 122% year-to-date, Goldman Sachs’s forecast indicates less than 1% upside from its recent closing price. The financial firm’s cautious stance on Tesla’s earnings prospects highlights the potential impact of ongoing price cuts on the company’s financial performance.


– CNBC’s Michael Bloom
– Goldman Sachs