Company / Analytics

Analytics, 26 January 2022

Tesla fourth-quarter Earnings Outlook

Tesla is expected to report record earnings Wednesday afternoon after its highest-ever quarterly and full-year sales. In anticipation of the earnings, trading on the stock is likely to get wilder.

Analysts polled by Bloomberg expect the company to post quarterly profits of $2.30 per share on revenues of $16.6 billion,” which is far above Q3 levels. Beyond Tesla’s Q4 earnings, analysts and investors will focus mostly on how fast Tesla can scale up production at two new factories this year with technology changes as well as battery and other supply chain constraints clouding the outlook.

Investors will also focus on CEO Elon Musk’s updated product roadmap, with eyes on the time frames for the launch of Cybertruck, the semi-truck, and a hoped-for $25,000 electric car; Musk promised in 2020 promised that in three years Tesla would offer a $25,000 electric car that can drive itself.

Tesla Earnings Background

Tesla has weathered the global supply chain crisis better than other automakers, producing a record number of vehicles and revenue is expected to rise 52% in the fourth quarter to $16.4 billion, according to Refinitiv data.

Automotive gross margin excluding regulatory credits is expected to be flat or up slightly from the previous quarter, despite an inflationary environment that has a negative impact on component costs.

Tesla’s two new factories in Texas and Berlin eventually could double Tesla’s production capacity, but it is not clear whether Tesla started production. CEO Musk said new factories will use manufacturing technology such as casting the body in only two or more pieces and integrating next-generation batteries into the vehicle body.

While the new technologies would help cut the number of vehicle parts, thus reducing manufacturing complexity and bringing down costs, they could be a “significant production risk,” Musk said in 2020.

In addition, investors will want to hear about the outlook for the supply chain, with automakers straining to meet the demand for electric vehicles.

In 2019, Musk unveiled Tesla’s futuristic electric pickup trucks, aiming to gain a foothold in the popular and profitable segment in the U.S. market.

Musk, who has often missed his self-imposed launch targets, has already delayed Cybertruck production from late 2021 to late 2022. A source told Reuters that Tesla aims to start initial production of the much-anticipated model in early 2023, saying they are making changes to features and functionalities from its original version.

Tesla’s market value exceeded $1 trillion in October when an announcement about Hertz buying its cars sent its market capitalization over the $1 trillion mark. But Tesla has not completely avoided supply chain woes, and Tesla also suffered a setback with a big recall announced last week.

Tesla Earnings Call: What to expect

As far as the balance sheet is concerned, analysts polled by Bloomberg expect the company to post quarterly profits of $2.30 per share on revenues of $16.6 billion. That would be a big jump from the previous quarter’s figures of $1.86 per share and $13.8 billion.

The fourth-quarter consensus earnings estimate was about $1.94 a share in late December before the big delivery numbers were released. The highest earnings estimates back then were about $2.60 a share. Now the highest estimate is about $3 a share.

Investors will get an update on three models that Tesla intends to start building in 2023. These include the Cybertruck, the semi-truck, and a hoped-for $25,000 electric car.

Musk promised in 2020 promised that in three years Tesla would offer a $25,000 electric car that can drive itself. Musk has also mused about a van for urban transit.

Investors will also hear how Tesla plans to scale up production at two new factories this year with technology changes as well as battery and other supply chain constraints clouding the outlook.

We may also learn more about when Tesla’s upcoming plants in Germany and Austin, Texas will start pumping out cars. Musk also could touch on Tesla’s developments in autonomous driving, solar panels, and energy storage.

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