Tesla Earnings: Despite Growth, Earnings May Disappoint

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Tesla could use a strong earnings report to prop up its stock price — but analysts aren’t optimistic.

The EV maker will report its fourth-quarter results after the market close on Wednesday, Jan. 25. Consensus estimates show quarter-over-quarter growth in revenue and earnings, but analysts and shareholders may be disappointed anyway.

analyst estimates

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Tesla’s fourth-quarter earnings estimate is $1.15 per share wall street journal, Seek Alpha and Jax are less optimistic, forecasting $1.07 and $1.14 respectively. Revenue estimates range from $24.6 billion to $25.3 billion.

Unfortunately for Tesla, analysts were more optimistic about the company’s fourth-quarter performance a month ago. At the end of December, the consensus earnings estimate was $1.28, or $0.13 higher. But then Tesla released a disappointing fourth-quarter production and delivery report—prompting analysts to lower their estimates.

Fourth Quarter Production and Distribution

On January 2, Tesla announced fourth quarter production of 439,701 units and deliveries of 405,278. On January 3, Tesla stock fell to a low of $104.64. This is the cheapest Tesla stock has been since August 2020.

Investors and analysts had expected more. reuters That hope was put on hold last September after Tesla set an internal fourth-quarter production target of 495,000 Model Ys and Model 3s. EV manufacturer missed that target Instead 419,088 of the two popular models were produced, with 20,613 being the Model SS and Model X.

Tesla halted production at its Shanghai plant in the last week of December. according to reuters, The Shanghai plant is Tesla’s largest, with a capacity to produce 750,000 vehicles annually. The company did not give any official explanation for the stoppage of work. Speculation links this to slowing demand in China and a rise in Covid-19 cases.

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quarter-over-quarter growth

Although analysts expect the fourth quarter to be a miss for Tesla, the current consensus estimate still represents double-digit growth versus the prior-year quarter. especially:

  • Estimated Earnings The $1.15 per share compares positively to Tesla’s fourth quarter 2021 result of $0.68. Note: Fourth quarter 2021 earnings were reported at $2.05 per share, but Tesla will implement a 3-for-1 stock split in August, 2022.
  • estimated revenue Actual fourth-quarter 2021 revenue of $25 billion would be up 41% from $17.7 billion.
  • Actual Q4 2022 deliveries Actual deliveries of 405,278 are up 31% from actual deliveries of 308,600 in the previous year quarter.

Rising costs, competition and leadership distraction

Along with other carmakers, Tesla has grappled with supply chain constraints, a global chip shortage, and rising cost of raw materials in the last few years. For a time, the company was successful in passing on higher input costs to customers through price increases.

The last of those price hikes was to be implemented in June of 2022. Still, Tesla kept its third-quarter automotive gross margin steady from the second quarter. This trend may not continue in the fourth quarter.

In January of 2023, Tesla changes course on pricing and announces a double-digit price deduction on its vehicle line-up. This move, intended to boost demand, will further reduce margins.

Tesla will also struggle with the increase competitionwhich Comes from the established carmaker with EV models as well as new brands like Rivian and Fisker.

As Tesla seeks to maintain its leadership position in electric vehicles amid rising costs, low margins and growing competition, its management faces another obstacle: CEO Elon Musk’s divided attention. As CEO of Tesla and SpaceX, Musk was already overbooked. He steps into the role of CEO of Twitter in October, 2022 and it has already been a distraction.

Musk has said that he will resign as CEO of Twitter when he finds a replacement. There has been no public update on the search.

Tesla Stock Trends

Tesla closed on January 23 at $144.13. That’s up 38% from the January low, but down more than 60% from its peak of $407, reached in November 2021.

Should You Buy Tesla Stock Now?

The Forbes investment team just released their 7 Best Buys of 2023… and Tesla isn’t on the list.

But it does include some of the team’s top convictions, including a grossly mispriced healthcare company, a cash-rich energy stock, REIT, inflation-resilient dividend stock, and more!

Click here to download 7 Best Stocks to Buy in 2023.

Credit: www.forbes.com /

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