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Tesla notches record Q4 profit but cites supply chain challenges as ‘main limiting factor’

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Tesla (TSLA) reported fourth quarter results after the bell on Wednesday that beat analyst estimates despite supply chain headwinds that have plagued the global auto industry at an unprecedented scale. Still, shares were weighed down after the electric vehicle giant indicated supply constraints are likely to persist. 

While Wall Street expected revenue to notch a record, stock watchers had their sights set on the company’s production outlook for insight on Tesla’s potential to grow earnings and profit in the year ahead.

Here were the main figures from Tesla’s report, compared to consensus estimates compiled by Bloomberg:

Revenue: $17.719 billion vs. $16.64 billion expected

Adjusted earnings per share: $2.54 vs. $2.37 expected

Despite stronger-than-expected Q4 results, shares plunged more than 6% after Tesla said it saw continuation of global supply chain bottlenecks and disruptions to transportation and labor.

“The rate of growth will depend on our equipment capacity, operational efficiency and the capacity and stability of the supply chain,” Tesla said in a statement. “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.”

The company reported revenue of $17.719 billion, up 65% year over year in the quarter and topping the $16.64 billion expected by analysts. Net income was up 760% at $2.32 billion, while adjusted earnings per share came in at $2.54, above the forecast of $2.37.

Tesla posted a $5.5 billion annual profit on $53.8 billion of sales in 2021, up from $721 million in profit and $31.5 billion in sales in 2020.

In addition to recent performance figures, analysts and investors are expected to get an update from Chief Executive Officer Elon Musk on Tesla’s product roadmap in an after earnings call, which is likely to include clarity around the time frame and pricing on new product launches such as the Cybertruck, as well as more information on the opening of new factories in Austin and Berlin.

“Normally, he’s not going to be on the call if there’s no good news or no new developments to report,” CFRA Research senior equity analyst Garrett Nelson. “So that’s another reason why we’re bullish heading into the quarter.”

To add to that, Musk told Twitter followers late Tuesday ahead of the anticipated update that he took the Cybertruck out for a spin in Texas.

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Nelson, who has a Buy rating on Tesla and a 12-month price target of $1,250, pointed out the electric-vehicle maker has beaten estimates eight of the last nine quarters, also adding that all-time quarterly production in Q4 sales bodes well for the company’s potential to beat due to the high fixed-cost nature of auto manufacturing.

“When you have a quarter when you have such strong volumes, that tends to really drive down unit costs and gives them a lot of bottom-line leverage,” Nelson said.

Tesla reported earlier this month that it produced 305,840 vehicles and delivered 308,600 in the last three months of 2021. The company topped its previous record in the third quarter to bring total deliveries for the year to 936,172 — up 87% from 2020’s numbers, even amid the global shortage of semiconductors and longer waits on deliveries due to shipping bottlenecks.

“Right now Tesla has a high-class problem of demand outstripping supply with this issue now translating into ~5-6 month delays for Model Ys, some Model 3s in different parts of the globe,” Wedush analyst Dan Ives pointed out. He added the production bottlenecks can be alleviated with the opening of new Giga factories in Austin and Berlin.

These factories remain central to Tesla’s growth story, as investors look to see whether the EV maker can scale up production to keep pace with vehicle demand.

In the third quarter, Tesla reported quarterly revenue that came in slightly short of consensus forecasts at $13.76 billion, compared to $13.91 billion expected. Earnings per share came in at $1.86 to beat the $1.67 expected. Tesla also handed over 241,300 electric vehicles to customers globally in the three months ending in September, reaching an all-time high for quarterly deliveries before topping that record in Q4.

Separately, Moody’s Investors Service Inc. gave Tesla a recent boost on its credit rating, notching the rank up to the highest junk rating of Ba1 on Monday, attributing the upgrade to “rapid” business scaling and improved profitability. The move brings Tesla one step closer to securing blue-chip status, which can come as soon as early 2023.

Tesla stock closed down 1.25% at $918.40 per share on Tuesday. Year-to-date, the stock is down 23.45% amid a broader rout in equities and the tech sector specifically.

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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