Tesla’s quarterly profit soars, but revenue falls short of estimates

On Wednesday, Tesla reported another sparkling quarter of earnings growth, but shares fell amid questions about the resilience of electric-vehicle demand, CEO Elon Musk’s manipulative Twitter trading and other reports. Other problems.

The electric vehicle (EV) maker more than doubled profits in the third quarter to $3.3 billion on increased automated deliveries.

But shares fell in after-hours trading after the company reported revenue of $21.5 billion, up 56 percent year-over-year, but about $500 million below its forecast. analysts.

The company flagged battery supply chain bottlenecks as a constraint on EV growth and noted that logistics volatility is an “improving” challenge.

“Tap on the wood, it looks like we’re going to have an epic year-end,” Musk said on an earnings call.

“Factories are running at full speed and we’re making every call we make.”

The results follow Tesla’s disclosure earlier this month that deliveries and production grew solidly in the third quarter after slumping in the previous period due to coronavirus-related factory closures at its Shanghai factory. of the company.

The automaker has avoided setting a specific annual delivery target, but analysts have put a target of around 1.4 million units for the whole of 2022.

Chief Financial Officer Zach Kirkhorn said Tesla is on track to increase production by 50% this year, but may fall short of that goal when it comes to getting cars into the hands of buyers.

Musk told analysts that Tesla is working to tackle the “freaking wave of deliveries” at the end of each quarter.

“There aren’t enough boats; there aren’t enough ships; there aren’t enough carriers to really support the wave, because it’s too big,” Musk said.

Tesla watchers are expecting a strong fourth quarter with a restored Shanghai factory and an increase in plants in Texas and Germany.

Immune to inflation?

But Covid-19 remains a wildcard as China continues to adhere to a zero-tolerance approach to fighting the virus.

Another question concerns whether Musk’s company continues to be immune to macroeconomic concerns, particularly inflation.

The cheapest version, the Tesla Model 3, is currently listed for around $48,500. With US inflation showing no signs of abating, analysts wonder if demand for expensive vehicles will continue to surge.

Shares of Tesla are down more than 16% since September 30, just before the company released third-quarter delivery figures and before Musk’s October 4 resurgence on Twitter’s acquisition effort and the start of a new one. trial in which he was sued by the company for breach of contract.

In the most recent move in the takeover saga, a Delaware judge suspended litigation between the parties to give time to finalize a $44 billion transaction.

But the judge has said that if the deal doesn’t close by October 28, the trial could be rescheduled to November.

“I’m very excited about the Twitter situation,” Musk said on the earnings call.

“I think it’s an asset that’s been worn out for a long time but has incredible potential, even though it’s clear that myself and other investors are currently overpaying for Twitter.”

Some analysts see the drop in Tesla stock – during a period that has seen the S&P 500 grow – reflecting worries that Musk will sell more Tesla stock to fund a purchase of the company. social media.

“Despite Elon Musk’s Twitter distractions, Tesla has managed to identify and minimize disruptive topics in automotive sectorGlobalData analyst Daniel Clarke said.

“That’s why its results show it’s one step ahead of its competitors.”

However, the analyst warns that reliance on the Chinese market is likely to be a major “kick in the road” for Tesla as geopolitical rivalry heats up with the United States and the automaker. China power BYD approach in the “rearview mirror”.

Tesla shares fell more than 6% to $208.16 in after-hours trading, though Musk said there was a chance the company could buy back billions of dollars worth of shares.

© 2022 AFP