UPDATED 19:01 EST / OCTOBER 19 2022

EMERGING TECH

Despite strong sales and profit, Tesla shares drop on revenue miss

Shares in Tesla Inc. fell in late trading after the electric car maker delivered a profit beat and a revenue miss in its latest quarter.

For the quarter ended Sept. 30, Tesla reported earnings of $1.05 per share on revenue of $21.45 billion. Analysts had expected earnings of 99 cents on revenue of $21.96 billion.

Revenue from automotive sales in the quarter hit $18.69 billion, up 55% year-over-year, while the cost of revenue for the business rose to $13.48 billion, up from $10.52 billion in the previous quarter, an increase relative to new car sales. Tesla had previously disclosed that it had produced 365,923 vehicles in the quarter and had shipped 343,830 of them.

Across Tesla’s other businesses, energy storage deployments increased by 62% year-over-year in the quarter to 2.1 gigawatt-hours, the highest level ever achieved by the company. Solar deployments were up 13%, to 94 megawatts, and revenue from services and others hit an all-time high. Paid Supercharging, Tesla’s electric vehicle charging points, grew by three times over the year. Tesla explained that it will continue to expand Supercharging pricing from fixed to variable to manage vehicle flow through the network better.

The earnings report did note that Tesla was encountering material headwinds, with raw material inflation hurtiing profitability along with expansion inefficiencies from several factories and production facilities.

Looking forward, Tesla said that it expects to achieve 50% average annual growth in vehicle deliveries depending on equipment capacity, factory uptime, operational efficiency and the capacity and stability of the supply chain.

Founder and Chief Executive Officer Elon Musk was upbeat on the Tesla earnings call, answering questions on demand and a possible share buyback.

“I can’t emphasize enough we have excellent demand for Q4 and we expect to sell every car that we make for as far into the future as we can see,” Musk said. “The factories are running at full speed and we’re delivering every car we make and keeping operating margins strong.”

The share buyback, described by Musk as “meaningful,” is likely to be between $5 billion and $10 billion next year, pending board approval. Musk also claimed that Tesla could “far exceed Apple’s current market cap” and then went on to claim the company would one day be worth both more than Apple Inc. and Saudi Aramco combined.

Musk’s now-expected showmanship and attempts to talk up Tesla did not impress investors, however, as its share price fell more than 5% after-hours.

Photo: Wikimedia Commons

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