Company / Analytics

Analytics, 21 April 2022

Tesla Earnings & Outlook – analysis

Tesla’s latest earnings exceeded expectations, as the automaker posted its highest quarterly profit to date. Shares rose above 7% pre-market on Thursday, trading at trading at $1,046.81 as the company beat analysts’ expectations on the top and bottom line.

Automotive revenue reached $16.86 billion, up 87% year-over-year. Automotive gross margins jumped to a record 32.9%, while gross profit was $5.54 billion in its main segment.

Despite pandemic-induced supply chain problems and a global chip shortage, Tesla delivered record number of cars, leading to the record growth. Growth was also supported an in increase in average sales prices.

Tesla’s record earnings led U.S. stock index futures up Thursday, following previous season where heavy losses in #Netflix previously triggered a selloff in technology and growth stocks.

Tesla earnings Outlook

Tesla reported better-than-expected first-quarter earnings for 2022 despite facing pandemic-induced production and supply challenges. Earnings per share rose $3.22, above estimates of $2.26. Meanwhile, revenue rose $18.76 billion, above estimates of $17.80 billion.

Tesla’s automotive reported automotive revenue of $16.86 billion, up 87% from the same period last year. Gross margins for the automotive segment jumped to a record 32.9% with Tesla reporting gross profit of $5.54 billion. Meanwhile, regulatory credits accounted for $679 million of automotive revenue for the quarter.

The record revenue was driven in part by an increase in the number of cars Tesla delivered and an increase in average sales prices. In early April, Tesla reported vehicle deliveries of 310,048 for the first quarter. Model 3 and Model Y vehicles comprised 95%, or 295,324, of deliveries in the period ending March 31, 2022. Tesla executives remain confident the company can grow at least 50% over 2021 numbers, but they also noted that company has lost about a month of “build volume” due to the latest covid-related lockdown in Shanghai.

In the energy segment, Tesla’s solar deployments dropped by nearly half to 48 MW in the first quarter of 2022 versus the same time last year. The company deployed 846 MWh of lithium ion-based battery energy storage systems, up 90% from the same time last year, but down from the previous quarter. The declines in solar deployments were caused by import delays on certain components that were beyond Tesla’s control.

Impact of geopolitics

Tesla’s global vehicle inventory dwindled to a three-day supply in the first quarter of 2022, due inflationary pressures, parts, and semiconductor chip shortages exacerbated by the ongoing pandemic and Russia’s brutal invasion of Ukraine. That’s down from a four-day supply of global vehicle inventory in the previous quarter, and eight-day supply during the first quarter of 2021.

Tesla Stock Outlook

Tesla stocks continues to defy gravity despite some analysts arguing that the stock is overvalued. Before the earnings, Tesla shared had dropped 7.5% year-to-date, and they fell 5% on Wednesday as analysts worried that the earnings would be worse than expected (similar to Netflix’s).

But Tesla stock outlook remains positive, and the company continues to outperform despite the pressure it has come in recent months. The company remains resilient than some may have predicted, given the broader climate for stocks.

During the quarter, Tesla opened two new plants - one in Berlin, which will supply Europe with new vehicles, and one in Texas, which is already pumping out EVs.

Still, risks remain. For example, Bank of America analyst John Murphy noted Wednesday that the Tesla stock “may already be priced for perfection (or at least priced for hyperbolic growth).” This may lead to fresh rallies.

Predictions - should I buy Tesla stock?

Is tesla stock a good buy? The current consensus among 41 polled investment analysts is to buy stock in Tesla Inc. The 35 analysts offering 12-month price forecasts for Tesla Inc have a median target of 1,103.00, with a high estimate of 1,580.00 and a low estimate of 67.00. The median estimate represents a +12.94% increase from the last price of 976.61.

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