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Tesla reported fourth-quarter earnings of $1.19 per share on sales of $24.3 billion.
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Tesla Solidly posted numbers In the make or break quarter for the electric vehicle giant. But current income is less important than guidance. And while much in flux,
Tesla
It expects to generate the best margins in the car business while developing its next-generation vehicle platform.
In short, Tesla (ticker: TSLA ) wants to maintain pressure on peers even as the global economy weakens.
Tesla rocked the global auto industry earlier this year by slashing prices by up to 20% to slow sales. It was able to do this because it has a cost advantage over other EV manufacturers. The low-cost platform could be Tesla’s next salvo as it tries to expand its position as the world’s largest EV maker.
“Price is really important,” CEO Elon Musk said on the earnings call. “These changes make a difference for the average consumer.”
Tesla reported fourth-quarter earnings of $1.19 per share on sales of $24.3 billion. Operating profit was a record $3.9 billion, above the previous record: $3.7 billion in the third quarter.
Wall Street was looking for earnings per share of about $1.13 and operating profit of $4.2 billion on sales of $24.7 billion. Free cash flow for the quarter came in at $1.4 billion. Analysts had expected $2.7 billion. Looking ahead, Tesla plans to produce 1.8 million units in 2023. The Street is looking for about 1.9 million units.
All numbers look good. The most significant numbers slightly trailed Street estimates, but Tesla stock is already down nearly 35% over the past three months. Expectations were not that high in the report.
Shares rose 3.8% shortly after the results were released, trading at around $150 a piece. Shares settled lower, up about 1.5% at $146.50. Tesla stock closed up 0.4% at $144.43 in Wednesday trading. The S&P 500 and Dow Jones Industrial Average Both days were flat.
It’s a relatively muted response given the importance of the earnings call. Shares should rise on Thursday as investors understand all the details Company conference call
Ahead of the call, Tesla offered some tidbits for investors.
Tesla’s new plants in Austin, Texas and Berlin, Germany were producing about 3,000 cars a week at the end of 2022. For Berlin, this is up from about 2,000 cars a week at the end of the third quarter. Tesla did not have weekly production numbers reported for Austin the last time earnings were released.
Tesla has also said its next-generation vehicle platform is under development. That’s the low-cost EV some investors are looking for. This will expand Tesla’s potential market.
CFO Zachary Kirkhorn said “customer interest remains high,” which is a sign that demand is holding up after the price cuts. He added that the cuts would affect profit margins, without giving too many details. He said margins “will remain healthy and industry leading”.
There have been several significant earnings reports in the company’s history. The fourth quarter of 2022 may be the most important.
In 2010, Tesla reported its first full quarter as a publicly traded company, in which it reported approx. $31 million in sales From the original roadster. It was the quarters in which the EV pioneer began delivering the Model S—its first mass-produced car—in 2012 and the lower-priced Model 3 in 2017. It was also the third quarter of 2019, when Tesla turned a surprising profit. .
For this quarter,
Tesla
It is currently the most actively traded stock in the US market and is facing a tough economic environment with rising interest rates, high inflation, and fears of a recession. Additionally, EV competition is growing, and investors are also wary of Musk’s new role as owner of social media platform Twitter.
Uncertainty surrounding profit margins looms large for investors. For 2022, Tesla generated a gross profit margin of about 26% from its automotive business. For the full year 2023, after price cuts, automotive gross profit margin estimates should fall to 17% to 22%.
Investors should brace for trading volatility on Thursday. Options markets indicate the stock will move about 10%, up or down, after the earnings report. Following the past four quarterly reports, shares have moved about 8%, up or down. During that period, the stock has increased twice and decreased twice.
Through Wednesday trading, Tesla stock is up nearly 17% year to date. The
Nasdaq Composite
is up about 8%.
Write to Al Root at [email protected]
