Tesla (TSLA) shares have been one of the better performing stocks among tech, rising 30% over the past months and 20% in six months, beating the S&P 500 index in both spans. The market has applauded the company’s delivery totals in the most-recent quarter as Tesla enjoyed strong year-over-year growth. But will it be enough to send Tesla stock back to all-time highs?
The luxury electric vehicle maker is set to report first quarter fiscal 2022 earnings results after the closing bell Wednesday. Despite concerns about completion from manufacturing titans like General Motors (GM) and Ford (F), it’s still foolish to bet against Tesla’s long-term success, especially given the company’s latest blowout quarter for deliveries. Tesla produced 305,000 vehicles and delivered 310,000 vehicles, for an annual production run-rate of roughly 1.2 million vehicles.
There were questions heading into the new year about how Tesla would perform after delivering 936,172 vehicles in 2021, almost doubling its total for 2020. Estimates now suggests Tesla will exit 2022 with an annual run-rate of more than 2 million vehicles. This would be an impressive achievement given the increased competition not only from upstarts like Lucid (LCID) and Rivian (RIVN). Tesla’s increased focus on production and profit margins have been a major factor in the company’s recent success. Its production and delivery guidance for 2022 will be the main driver of the stock on Wednesday.
In the three months that ended March, Wall Street expects The Austin, Texas-based company to earn $2.26 per share on revenue of $17.78 billion. This compares to the year-ago quarter when earnings came to 93 cents per share on revenue of $10.39 billion. For the full year, ending in December, earnings are expected to rise 57% year-over-year $10.64 per share, while full-year revenue of $83.93 billion would rise 56% year-over-year.
Beyond the top and bottom-line numbers, the market will focus on operating issues, including Tesla’s ability to navigate the ongoing lockdowns in Shanghai, China which have raised concerns about production capacity. “Operations at Tesla Shanghai Gigafactory have been intermittently suspended since late March, resulting in a production capacity loss of at least 24,000 units,” analysts at Rystad Energy said in a recent note.
While Tesla is expected to restart production at the Shanghai factory next week, Chaim Siegel, analyst with Elazar Advisors expects some production impact in the quarterly results. Tesla’s auto gross margins is another metric Siegel will be watching, as well as its average selling price. Over the past few quarters, Tesla has done a solid job offsetting rising costs and supply-chain challenged by raising prices on various models.
Tesla in Q4 surpassed expectations on both the top and bottom lines. Q4 adjusted EPS of $2.54 topped estimates by 16 cents, revenue of $17.72 billion surged 65% year-over-year, and more than $1 billion than the Street expected. Just as impressive, operating margin was 14.7% of revenue, while automotive gross margin came in at 30.8%, rising 30 basis points sequentially and beating the consensus mark of 29.9%. This drove net income to $2.3 billion.
All told, Tesla’s liquidity has drastically improved. The company ended the quarter with $17.6 billion in cash with a total debt (excluding vehicle and energy product financing) falling to $1.4 billion. These metrics aren’t surprising, given the company’s strong production and delivery totals. The question is what will be the production and delivery forecast for 2022? The company has maintained its multi-year deliveries guidance for 50% average annual growth. Will Tesla stick to that and how will the stock respond?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Richard Saintvilus
After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.
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