Tesla posted solid numbers for the fourth quarter, but investors will want to hear more about demand and profit margins tonight.
(ticker: TSLA) reported late Wednesday fourth-quarter earnings of $1.19 per share on sales of $24.3 billion. Operating profit rose to a record $3.9 billion from the previous record: $3.7 billion was reported in the 3rd quarter.
Wall Street was looking for earnings per share of about $1.13 on sales of $24.7 billion and operating profit of $4.2 billion.
Free cash flow during the quarter was $1.4 billion. Analysts had expected $2.7 billion.
Looking ahead, Tesla said it plans to produce 1.8 million units in 2023. The Street is looking for about 1.9 million units.
OK report. Shares rose 3.8% in after-hours trading shortly after the results were released. Tesla shares closed up 0.4% at $144.43 in trading on Wednesday. The S&P 500 and Dow Jones Industrial Average were flat for the day.
Investors can expect the stock to move after the company’s earnings conference call, which begins at 5:30 p.m. ET. Investors will be looking for comments on production, profit margins, EV competition and new products. They will want updates on everything.
This is the latest news. Read the earnings report preview below.
Earnings reports from Tesla are always must-watch events for investors, and the EV pioneer’s fourth-quarter report on Wednesday afternoon is no exception. In fact, it may be the most important earnings report in the company’s history.
There have been other “most” significant quarters in the company’s history. In 2010, Tesla (ticker: TSLA) reported its first full quarter as a publicly traded company, generating nearly $31 million in sales from the original Roadster. The EV pioneer had quarters in 2012 when it launched its first mass-market car, the Model Si, and in 2017, when it launched the lower-priced Model 3.
There was also the third quarter of 2019, when Tesla posted a surprise profit. In the three years prior to that period, Tesla lost about $2.5 billion in operating profit and used just over $5 billion in cash. Since then, Tesla has generated a total of $19 billion in operating profit and $15 billion in free cash flow.
There is one case where the upcoming fourth quarter report trumps them all.
is now the most actively traded stock in the US market, but faces a tougher economic environment with rising interest rates, elevated inflation and recession fears. In addition, EV competition continues to grow, and investors are also wary of CEO Elon Musk’s new role as owner of social media platform Twitter.
“After unprecedented hyper-growth in the EV market over the past few years, largely driven by Musk…Tesla will face a bleaker macro in 2023,” Wedbush analyst Dan Ives wrote in a report Tuesday.
Ives is a Tesla bull, rating the stock Buy. His target is $175 per share.
Tesla sharply cut prices for its EVs in early 2023 amid a darker macroeconomic backdrop that created fear and uncertainty around demand for EVs and Tesla’s profit margins.
For 2022, Tesla will generate roughly 26% gross profit from its auto business, based on the first three quarters of the year and Wall Street consensus estimates. For the full year 2023, after the price cuts, the car’s gross profit margin forecasts will decrease from 17% to 22%. Operating profit estimates for 2023 now range from about $9 billion to $30 billion, according to FactSet.
That’s a wide range, even for Tesla, and means the stock should experience a lot of volatility in 2023. The $21 billion range for operating profit forecasts is about 140% of the $15 billion average estimate. In early 2022, the estimated range was about $13 billion, or about 100% of the average estimate.
When Tesla reports after the market close on Wednesday, investors will want an update on profit margins as well as production and sales. They will also want to see how the year ended.
Wall Street expects fourth-quarter earnings of about $1.13 billion on sales of $24.7 billion. Operating profit and free cash flow are projected at $4.2 billion and $2.7 billion, respectively.
Tesla earned $1.05 a share on sales of $21.5 billion in the third quarter of 2022. Operating profit and free cash flow were approximately $3.7 billion and $3.3 billion, respectively.
Whatever happens in Tesla’s report, investors should be prepared for trading volatility. Options markets assume that the stock will move up or down about 10% after the earnings report. Shares have moved up or down an average of about 8% since the last four quarterly reports. During that time, the stock has doubled and fallen twice.
Tesla shares have had a strong start to the year, up nearly 13% year to date. The S&P 500 and Dow Jones Industrial Average rose about 3% and 6%, respectively.
Tesla shares were down 3.4% in early trading on Wednesday. The
It decreased by 2.2%.
Email Al Root at email@example.com