What Did We Learn From Tesla's Latest Earnings Call?

What Did We Learn From Tesla’s Latest Earnings Call?

Tesla beats analyst estimates in a welcome earnings report for all its shareholders, but does it still hold future value for investors?

Tesla (NASDAQ: TSLA) certainly brought us all on a ride over the past year and unfortunately, for me at least, that ride wasn’t in the front seat of one of its famed sportscars. 

The company briefly broke the trillion-dollar mark in the middle of a remarkable bull-run, but also suffered some significant drops. The most notable of these came about as a result of Elon Musk’s infamous tweets, with the firm unable to separate its fortunes from the itchy Twitter fingers of its enigmatic owner.

Now, in the midst of widespread market volatility, Tesla has reported its highly anticipated quarterly earnings report. Let’s take a look, shall we?

Tesla’s earnings

Tesla reported adjusted earnings per share (EPS) of $2.52 against analyst expectations of $2.36, on revenue of $17.72 billion versus an anticipated $16.57 billion. This represents impressive revenue growth of 65% year-over-year (YoY), with automotive revenue rising by 71% to $15.97 billion.

It wasn’t all rosy for the California-based company, however, with revenue from energy generation and storage coming in at $688 million — down 8% from the year-ago quarter. Investors are unlikely to be overly concerned with this falloff considering the pointed focus on automotive production over the past quarter.

Tesla’s 2022 outlook

Tesla’s polarizing CEO Elon Musk outlined several considerations for the rest of the year in a shareholder deck that accompanied the earnings call. Chief among these was reduced capacity in Tesla’s factories, with supply chain issues continuing to torment the company’s production line. Musk stated,

“Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022”

Musk also confirmed that the global semiconductor shortage is also still likely to affect Tesla’s production targets. These headwinds have forced the company to announce that it will not introduce any new models this year while these constraints still exist.

This means no Cybertruck in 2022, while plans to develop a low-cost car have also been scrapped following initially being announced at the company’s ‘Battery Day’ presentation in 2020.

On a more positive note, production is scheduled to ramp up in new Gigafactories in Austin and Berlin, while existing factories in Shanghai and Fremont both continue to grow. Tesla also confirmed a continued desire to develop its Full Self-Driving software, labeling it one of its “primary areas of focus.”

Is Tesla a buy?

Tesla continues to outperform despite already lofty expectations for the trailblazing auto manufacturer. Shareholders will undoubtedly be excited to see production ramping up across all factories and the associated revenue boost that comes along with it. If Tesla can finalize manufacturing permits from local authorities for its Berlin factory, the company could rapidly increase its foothold in Europe by eliminating a lot of the friction associated with importing cars to the continent. 

Continued focus on innovation, particularly in relation to self-driving capabilities, ensures that Tesla maintains its first-mover moniker that it has had since it first normalized electric vehicles (EVs) within the mainstream consciousness. Maintaining safety standards will be key in ensuring the firm holds onto the trust of the public as it pioneers a technology that could ultimately change our entire concept of driving.

For these reasons, Tesla still appears to be leading the way in automotive innovation. Other companies have joined the race and are starting to pull Elon and co. back, but Tesla still remains far ahead in the EV space. Until the chasing pack catches up, Tesla will continue to be a solid addition to most forward-looking long-term portfolios.

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