Electric vehicle maker Tesla (NASDAQ:TSLA) is expected to report its quarterly earnings numbers this
week. It's been a tough year for the stock as it's down over 40% year to date, performing worse than the
S&P 500 , which is down 24% over the same stretch.
Although the company has been growing and delivering profitable numbers in recent quarters, the
problem is Tesla still trades at a hefty price-to-earnings (P/E) multiple of 75. At the start of the year, its
P/E was well over 200. Investors are paying a premium for the company's future growth and the
potential for the EV market as a whole.
In two of the past four quarters, shares of Tesla jumped after the company reported its latest results.
When Tesla last reported earnings in Q2, its revenue was up an impressive 42% year over year, and net
income doubled from the prior-year period. Those kinds of results could be hard to replicate given rising
inflation.
Earlier this month, the company released its delivery numbers, which can help predict sales, and at
343,000, the figure came well short of the 364,660 deliveries that analysts were expecting. That could
be an ominous sign for the company that its upcoming quarterly results may not be so strong this time
around.
Any sort of softness in the current bear market could lead to more of a decline in value. Given the
underwhelming delivery numbers and the stock's high valuation, investors are likely better off waiting
until after the quarterly results to decide whether to buy shares of Tesla. Buying before earnings could
be too risky of a move to make right now.
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