When Tesla reports third-quarter earnings after the market closes on Wednesday, the result may be a return to fundamentals for Wall Street, as some investors were disappointed by a highly hyped but insufficiently detailed robotics event this month.

Tesla's (TSLA.O) shares are down about 11 percent so far this year. While the event, held in an urban setting at a movie studio in Burbank, California, debuted Tesla's Cybercab robot taxi prototype and sold the public on a future of easier, autonomous transportation, Tesla faced the usual problems -- sales and profit growth, slowing demand, competition from emerging Chinese electric car makers and Elon Musk's ability to deliver on his promises.

As MarketWatch noted last week, Barclays analysts said that “at least for now the focus is back on fundamentals.” Those fundamentals include Tesla’s demand outlook and signs of profit stabilization.

“However, given our expectations for a Q3 beat and the reminder of near-term stable expectations, we believe Q3 results could serve as a near-term positive catalyst,” the analysts said, adding that “margins have bottomed out.”

But as concerns about demand remain, the Wall Street Journal reported last week that Musk has chosen a confidant to run Tesla's operations in North America and Europe. While the company is moving forward with its self-driving technology, it is under scrutiny from regulators after reports of crashes in road conditions such as fog, sun glare and dust. In one of the incidents, the National Highway Traffic Safety Administration said a vehicle "fatally struck a pedestrian," while injuries were reported in another.

The event in Burbank, called "We, Robot," also introduced a larger vehicle called the Robovan and an updated version of the Optimus humanoid robot. He said the robot taxis would have no steering wheels or pedals and were expected to cost less than $30,000.

He also said that fully autonomous, unsupervised self-driving technology is expected to be launched in Texas and California next year on Model 3 and Model Y vehicles, and said the company expects to produce Cybercabs "by 2027."

But before that, he noted: “I tend to be overly optimistic about time frames.”

Bernstein analyst Toni Sacconaghi called the event "disappointing and shockingly lacking in details." William Blair's Jed Dorsheimer said the presentation contained "little to weigh on bears in the near term." Morgan Stanley's Adam Jonas also questioned how much of a threat Tesla's ambitions pose to Uber and Google's Waymo.

However, analysts at Bank of America said the activity overall met expectations and said "now may be a good time to raise low-cost capital."

“[Tesla] is making investments related to robotaxis, robotics (especially Optimus), and AI that are likely to require significant capital," they said. “Given this, and the headwinds Tesla faces in its core EV business, we would not be surprised if [Tesla] raises capital, which it has historically been able to do at a very low cost relative to its peers.”

Article forwarded from: Jinshi Data