What Jim Cramer's Watching When Tesla Reports Earnings

Author:
Publish date:
Video Duration:
45

Tesla is set to report earnings this week. 

Jim Cramer weighed in on what he's watching when the company releases its earnings report.

TheStreet's Annie Gaus weighed in on what investors should be watching when the company reports earnings.

First up? The impact of price cuts.  

"To help stimulate demand, Tesla announced several price cuts this year both in the U.S. and in China. Just last week, it slashed prices for Model Y unit in the U.S.; in late May, it reduced prices across its lineup. Analysts are mixed on whether this amounts to a savvy business move or a red flag that organic demand is lagging. Tesla's quarterly revenue stacked up against the 90,650 vehicle deliveries it reported earlier will shed light on the impact of price cuts to Tesla's top line. And the company's commentary on the quarter, and forward-looking statements, may reveal more on the rationale of the price cuts and how they may affect Tesla's results going forward," wrote Gaus.

And then there's free cash flow. 

Tesla shares have had a historic run-up over the past few months, despite the impacts of COVID-19. It's now the most valuable automaker in the world, with its valuation exceeding $300 billion.

More: What This Analyst Is Watching in Tesla Earnings 

And, of course, China demand. 

The potential for China to become a major sales market for Tesla is a linchpin of the bull thesis, and it appears that EV sales in China have rebounded from earlier lows tied to COVID-19. According to China's Passenger Car Association (CPCA), Tesla sold 14,954 Model 3 vehicles in June, up from 11,095 units in May and 3,635 units in April. 

Watch the video above for more.

You can follow Jim Cramer and Katherine Ross on Twitter at @JimCramer and @byKatherineRoss. Read more from Katherine Ross here.

Watch More of the Latest Videos on TheStreet and Jim Cramer