On the eve of the financial report, Tesla has experienced a "seven consecutive declines". Can Musk "turn the tide" tomorrow morning?

Amid investor concerns about first-quarter performance, Tesla's stock price has experienced a "seven-day decline".

At the close of the U.S. stock market on Monday, Tesla's stock price fell by 3.4% to $142.05, marking the seventh consecutive trading day of decline and hitting a new low since January 2023. Tesla's year-to-date decline of 43% makes it the second worst-performing stock in the S&P 500 index.

Tesla has tied its record for the longest consecutive decline, with significant gains in the months following the seven-day declines in September 2018 and December 2022.

Last week, Tesla reduced prices in the U.S., China, and the entire European market, with price cuts of up to $2,000 on its best-selling Model Y SUV and entry-level Model 3 sedan. Tesla also lowered the price of its advanced driving assistance system "Full Self-Driving" (FSD) by one-third.

Meanwhile, Tesla announced a recall of 3,878 Cybertruck electric pickups in the U.S. due to a risk of the accelerator pedal getting stuck, which could pose safety issues.

Prior to the recall notice and the new round of price cuts, Tesla had initiated a challenging restructuring, notifying employees earlier last week of layoffs exceeding 10%, affecting 14,000 employees. The layoff process is still ongoing, with reports indicating that some employees have received termination notices in the past few days.

The continuous negative events have heightened market concerns about Tesla's first-quarter financial report. Tesla plans to release its first-quarter financial report after the U.S. stock market closes on Wednesday morning Beijing time, followed by an earnings conference call.

Will Tesla face its worst financial report in seven years?

The most evident deterioration in Tesla's first-quarter financial report is the delivery data.

In early April, Tesla's first-quarter car production and delivery report revealed that Tesla's deliveries fell by 8.5% year-on-year to approximately 386,800 vehicles, a decrease of over 20% from the previous quarter, far below analysts' previous expectations of 449,000 vehicles, marking the largest deviation from expectations on record.

Disappointing delivery data coupled with a new round of price cuts have put pressure on Tesla's profits, with analysts seemingly having a unanimous expectation for this.

Barclays analyst Dan Levy predicts that Tesla's first-quarter gross margin will hit its lowest level since early 2017. In early 2017, Tesla had just begun production of its first mass-market model, the Model 3According to HSBC statistics, analysts expect Tesla's first-quarter revenue to decline by 5.1%, marking the first year-on-year revenue decline since the impact of the COVID-19 pandemic on operations in the second quarter of 2020.

According to media surveys, analysts expect Tesla's first-quarter earnings per share to be $0.48, with revenue of $20.94 billion. For comparison, Tesla's fourth-quarter revenue in 2023 was $25.17 billion, and first-quarter revenue in 2023 was $23.3 billion.

Model 2 and Robotaxi to be the Focus of the Conference Call

Bank of America analyst John Murphy wrote in a report on Monday, "Investor sentiment towards Tesla has deteriorated since the end of 2022." He expects investors to "closely watch comments related to growth plans," especially the next-generation electric vehicle Model 2 and the Robotaxi.

On April 5th, it was reported by the media that Tesla had abandoned the development plan for the affordable Model 2 and shifted focus to developing the Robotaxi. Musk quickly denied this, calling it false, but later announced that the Robotaxi would be officially launched on August 8th.

Levy stated, "Model 2 may receive the most attention, but do not expect a satisfactory answer."

Musk has previously stated that without autonomous driving, Tesla is "basically worth zero dollars." In tomorrow's conference call, he needs to explain and prove to investors that the shift towards prioritizing Robotaxi is not just a distraction for investors amidst declining profit margins, but a new dawn and hope for the company.

He expects Tesla's free cash flow in the first quarter to be "moderately negative," marking the first negative free cash flow since early 2020.

UBS analyst Joseph Spak wrote in a report on Monday that investors should "expect some sparks" during the conference call. He added that Tesla's automotive gross margin (excluding environmental subsidies) and free cash flow will be key indicators.

Spak also believes that there is a possibility of a negative turn in free cash flow in the first quarter. He stated that cash flow is becoming more important for Tesla as the current environment does not allow Tesla to simultaneously launch the Robotaxi and Model 2.

Tesla Stumbles, Shorts Feast

As Tesla's stock price plummets, the big short sellers are having a "spring."

According to data from S3 Partners, as of Monday morning, Tesla's short interest was approximately 111 million shares, accounting for 4% of outstanding shares, with a nominal value of $16.3 billion.

Short sellers betting against Tesla have made about $9.4 billion so far this year, becoming the most profitable short position in the U.S. market, far exceeding Apple's $3 billion