Tesla earned a record profit, but delivering isn’t everything.
MR. Blogger
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Tesla earnings
Tesla’s profitability and consumer demand will be key to the success of their electric vehicle business this evening. That’s because this quarter was a make-or-break moment for the company.
Tesla announced new information about its production and a cheaper vehicle platform before announcing earnings. Its ticker symbol is TSLA.
Tesla enjoyed an edge over other EV makers in terms of cost when it dropped its price by as much as 20%. This was due to the company's lower-cost platform that gave it a competitive advantage over its competitors. With this initiative, Tesla could be preparing to take the title of largest EV maker in the world.
Tesla reported $24.3 billion in sales for their fourth quarter, resulting in earnings per share of $1.19. Additionally, the company reported an operating profit of $3.9 billion, setting a new record for the third quarter.
Wall Street expected $2.7 billion in total cash from the financial quarter. However, they were looking for earnings per share of about $1.13 and operating profit of $4.2 billion from sales of $24.7 billion. Additionally, they were looking for an operating profit of $4.2 billion from a sales of $24.7 billion, which would give the company free cash flow of $1.4 billion for the quarter. In 2023, the Street expects Tesla to produce 1.9 million units, compared to the company's planned 1.8 million units. This is looking toward the future of Tesla and its growth.
Shortly after results were released, 3.8% more shares were traded. Currently, they're trading at $144.01, down 0.3% from when results were released. All of the numbers look fine and the upward trend hasn't changed. Tesla stock increased by 0.4% to $144.43 on Wednesday, closing the price gap with other market indices. Both the S&P 500 and the Dow Jones Industrial Average remained unchanged throughout the day.Tesla’s quarterly conference call is next on the agenda. It takes place at 5:30 p.m. Eastern Time, and it’s not a positive event for the company’s financial standing. Investors need to know about new products, profits margins, EV competition and production when querying an update.
Tesla provided additional information for investors in a prior earnings releas. The Tesla Motors plant in Berlin, Germany, was producing around 2,000 cars per week at the end of the third quarter. Their new Austin, Texas plant, however, was producing up to 3,000 cars per week at the end of 2022. None of Tesla's earnings reports listed production numbers for Austin during that time
Tesla plans to release a more affordable vehicle platform next. This will allow the company to have a larger market for its products. Tesla’s current platform is being developed.
Tesla’s fourth quarter earnings report is typically the most important for investors. These reports always require close observation by investors due to the sheer volume of information contained in them.
Tesla Motors Inc. has had other “most important” quarters in its past. For example, they reported their first full quarter as a publicly traded company in 2010. That year, they sold approximately $31 million worth of sales from the original Roadster. Tesla started selling the Model S in 2012 through three different areas of the factory. They released the Model 3 cheaper in 2017, and also made a profit in 2019 unexpectedly. Additionally, two more sections of the plant housed the Model 3.
As Tesla's fourth-quarter earnings report approaches, critics believe its importance outclasses all others. The company currently holds the highest spot on the U.S. stock market rankings. Tesla faces stiff competition from EV manufacturers and investors are concerned about CEO Elon Musk's increased influence over Twitter as its owner. Additionally, the current economic climate is thought to be harder for Tesla than others due to high inflation, increasing interest rates and recession fears.
Tesla’s projected profit margins for the next year are in jeopardy after price cuts. The company projected a 26% gross profit margin for its automotive business in 2022. For 2023, this could drop to anywhere between 17% and 22%.
FactSet estimates operating profit for 2023 ranges from about $9 billion to $30 billion.
Tesla's operating profit projections vary significantly. Assuming these projections are accurate, the stock should experience a huge amount of volatility in 2023. The $21 billion range for these projections is about 140% of the average estimate. On January 1, 2022, investors around the world expected to pay between $13 billion and $15 billion for Tesla stock.
Tesla's earnings report causes a significant shift in stock prices Thursday; options markets suggest volatility will range between 10% up and down. Since the last 4 quarterly reports, shares move up or down about 8%. Twice, shares moved up and fell twice.
Tesla stock has gained about 17% on the year since Wednesday trading began. Additionally, the Nasdaq Composite has increased about 8% since then.
