Tesla (NASDAQ: TSLA) is set to announce its first-quarter 2022 financial results today, April 20, after the markets close. As usual, a conference call and Q&A with Tesla’s management are scheduled after the results.
Analysts have a fairly bullish outlook for the companies’ results.
Tesla earnings are expected to jump 142% from a year ago. Other traditional automakers, such as General Motors, Ford, Toyota, and Volkswagen, are all expected to report a drop in earnings — ranging from a 14% decline at VW to a 58% plunge at Ford — due to supply chain and production problems.
But how the company does in the first quarter isn’t the biggest concern for Tesla shareholders. It’s what lies ahead for the company. Here’s a rundown of what to look for in its earnings report and call with investors.
Chinese lockdowns –
Speaking of which, investors will want to know what’s the outlook for production in China in the face of those lockdown orders.
Tesla is reported to have reopened its plant in Shanghai this week, though the company has yet to confirm that. Investors will want to know if it can stay open, and what is going on with the factories of suppliers of critical parts, such as batteries.
“The main focus of the earnings call must be around supply coming out of China,” said Ives. “That’s the biggest overhang for the stock right now. They’ve already lost about 50,000 cars of production so far in the second quarter. The question is are they going to give any guidance?”
Battery development –
Once upon a time, automakers lived and died by their internal combustion engines. Features such as fuel injection and measures such as horsepower were the keys to attracting buyers and getting top dollars.
Now in the age of EVs, it’s batteries and a new set of performance measures: How far can a car go on a single charge? How fast can it charge? And how much will it cost to build?
Tesla’s next-generation battery is the 4680, which is expected to provide a breakthrough in both costs and the distance a vehicle can travel on a single charge. Tesla has only recently started using the battery in vehicles, and it is still only available in limited volumes.
The outlook for production of that battery, and the supply of chips and raw materials it needs to build them, is crucial for Tesla’s plans to increase vehicle production.
New factories –
Within the last five weeks, Tesla has started shipping cars from two new factories: one outside of Berlin and one outside of Austin, Texas, where its headquarters is now based.
How fast it can ramp up production, particularly with the supply chain problems caused by China’s Covid lockdowns, and to a lesser extent the war in Ukraine, is crucially important if the company is to hit its growth targets for the year.
Beyond that, investors will probably be looking for more on the new products set to be built in Austin, namely the Cybertruck pickup and Tesla’s Semi truck. No significant production of either is expected before 2023 at the earliest, but it will be a bad sign if they are pushed back even further, especially with Ford and GM set to roll out their electric trucks soon. The Ford 150 Lightning is due in showrooms this spring. The Silverado EV is due out next spring.
Tesla’s market cap is more than the combined value of the 12 largest automakers on the planet not because it is so much more profitable, but because of its growth projections. If it can’t stick to its better than 50% annual growth path, the company’s stock could take a tumble.
Tesla delivered about 310,000 vehicles in the first quarter of 2022, which was a record and an increase from about 309,000 delivered the previous quarter. But at the start of the year, analysts had expected closer to 325,000 vehicles to be delivered in the first quarter.
The delivery results were affected by Covid. Tesla’s plant near Shanghai had to shut down because of a wave of new Covid-19 infections that local officials are struggling to contain.
But even though the quarter’s deliveries came in about 5% to 10% lighter than Wall Street’s initial expectations, analysts’ first-quarter earnings estimates have remained at about $2.27 a share for three months.
Analysts’ estimates for first-quarter sales — about $17.9 billion — haven’t budged either.
Now, all hope for an earnings beat isn’t lost for Tesla bulls. The company reported $2.54 a share in adjusted earnings in the fourth quarter of 2021 on deliveries of about 309,000. And Credit Suisse analyst Dan Levy projects Tesla will earn $2.56 a share.
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