Tesla has missed quarterly revenue expectations for the second time in three quarters. This is due to several factors, including high raw material costs, supply chain problems and financial pressures. As a result, investors are now worried about Tesla’s long-term prospects. This is also one of the reasons why Tesla shares have plummeted.
Tesla delivered 35 per cent more vehicles in the July-September period than in the previous quarter
Tesla has been reporting impressive sales growth, but its third quarter results were a bit below expectations. It delivered more than 35 per cent more vehicles during the July-September period than it did during the same period last year. The company has a target of boosting its deliveries by 50 per cent this year, but there are signs that the market is cooling. CEO Elon Musk is expected to meet with analysts on a conference call to discuss the results.
Tesla beat its previous quarterly record by over 30,000 vehicles, but missed Wall Street estimates by a few thousand. The company attributed this miss to vehicles in transit, but had all of its cars been delivered on time, it would have reached its target.
Tesla has reported higher than expected deliveries in the third quarter, even with a factory shutdown in July. The company said it delivered 343,380 vehicles in the period, an increase of 35 per cent from the second quarter. Tesla expects to sell 490,000 cars in the fourth quarter to meet its forecast of 50 per cent annual growth.
While deliveries have increased consistently over the past few quarters, the company is facing headwinds with the transport capacity of its vehicles. However, it hopes to address this by opening factories in Austin, Texas and Berlin. Even though the company faces logistical hurdles in moving vehicles, the company has managed to grow its deliveries every quarter since the start of the pandemic.
The company has become the world’s largest EV manufacturer, ahead of the Chinese companies BAIC Motor and BYD. Experts in the industry expect more competition in EVs in the coming years. By 2020, more than 100 international OEMs are expected to launch new electric vehicles in China and Europe.
Deliveries jumped up 55% compared to a year ago
Deliveries at Tesla jumped up 55% in the third quarter, up from 53,000 units in the previous quarter. The company expects to deliver 100,000 Model S and X vehicles this year. With the majority of deliveries going in the second half, Tesla is on track to meet this target.
The company has a massive push coming up during the end of Q3, so it’s asking its employees to pitch in to ensure a smooth transition. The company has a history of making big pushes to deliver cars near the end of every quarter. Musk described last quarter’s delivery push as “nutty,” but he said he was expecting a more manageable Q3 push.
Tesla boosted its production capacity in its European factories. While deliveries at the Austin factory are below capacity, a new factory in Berlin will allow the company to build more cars. The new facility will have three shifts by the end of the year. The company has struggled with high shipping costs and shortages of semiconductors, but these issues are quickly being resolved, the company says.
The company’s upcoming March delivery figures will serve as an important benchmark for the EV industry. If the company is able to maintain its strong delivery figures, this could continue the stock’s rally. The company’s potential stock split is also expected to boost the company’s stock performance.
The company’s executives have a history of setting ambitious goals and making them happen. Elon Musk, the company’s CEO and product architect, previously said the company could hit a run rate of 40,000 vehicles by the end of 2022. However, the company has revised its goal to 50% by the end of July. The ambitious goal comes despite looming concerns over supply chain risks and increasing competition in the auto industry. This forecast covers the next four quarters and sets an ambitious target of almost 495,000 Model Y and Model 3 vehicles per quarter, which accounts for 95% of Tesla’s output.
Deliveries increased by just 6%
Tesla’s quarterly revenue forecast was a bit below the company’s expectations. The automaker’s delivery numbers were lower than anticipated, and it blamed steep costs associated with getting the cars onto delivery vehicles. Tesla’s third-quarter production surpassed 22,000 vehicles, but the company’s sales are still far below the expectations it set earlier in the year.
While the quarter wasn’t exactly the best, the company is making progress in delivering the cars at a smoother pace. Its overall margin, which represents the profit margin on new vehicles, remained relatively high at 27.9%, a relatively high margin in the auto industry. While Tesla has been trying to improve its delivery speeds and costs, its gross margin was a little below last year’s level.
Tesla’s adjusted earnings were $3.7 billion, up 75% from the same period a year ago, but the company missed analysts’ expectations for earnings of $3.5 billion. Revenues were $21.5 billion, an increase of 56% compared to the previous quarter and slightly below the $22.2 billion that Wall Street had forecast. Despite the disappointing earnings report, Tesla’s stock fell 6% in premarket trading following the report. The shares had already lost 37% this year.
A key factor in Tesla’s results is its geographic focus. Over 52% of its Q3 revenue came from China. The company produced around 180,000 cars in total, but only sold 116,000 of them domestically. The weakening yuan is expected to weigh down on sales.
Elon Musk’s takeover of Twitter
Elon Musk, the CEO of Tesla and SpaceX, has made it clear that he wants to buy Twitter. The billionaire has expressed his desire to rid the social network of advertising, and has spoken about a subscription-based business model and crackdown on bot accounts. While the deal is still pending, investors are already worried about how Musk’s takeover will affect Twitter’s business. Twitter has also removed all of its previous outlook and goals, indicating that it will not issue any forward-looking guidance for the company.
The move makes sense because Elon Musk has a large Twitter following. Twitter is a popular site for business leaders, journalists, and attention-hungry politicians, and Musk has 100 million followers on the site. He can use Twitter to reach a huge audience and gain a competitive advantage. He can even use Twitter’s audience to further promote his products.
Musk’s attempt to buy Twitter has sparked a debate in the tech industry over the price and terms of the deal. Many investors, particularly in the technology sector, feared that Musk was spreading himself too thin. However, it seems clear that the company is still worth over $30 billion and Elon Musk has expressed confidence in its future value.
In addition to the acquisition costs, Twitter has also incurred restructuring and downsizing costs. The company has already spent $33 million on the deal, and is set to spend more than that. As a result, Twitter is now trying to push through a deal with Musk that he originally rejected in April. As of this writing, Twitter has not yet sent a finalized proxy statement.
In its second quarter report, Twitter reported disappointing revenue for a second time, missing analysts’ expectations for the second quarter. Revenue in the quarter was down 1% compared to the same period last year and the previous quarter. The company blamed this on headwinds in the advertising industry and uncertainty related to its takeover by Elon Musk.
Stock price decline since record highs
Tesla’s stock price decline since its record highs has been attributed to a few different factors. These include the Twitter deal, massive uncertainties about Musk’s role in the company, and unfavorable back-and-forth discussions. In addition, there have been macro headwinds for the company. If the company continues to see declines in its stock price, Musk may have to sell more shares or pledge more money.
First, the stock’s price has declined by around a third since its record high in January. That’s the third correction in a year. As investors are increasingly concerned about rising interest rates, Tesla’s stock price has declined significantly. As a result, its market capitalization has shrunk by nearly $300 billion since its record high. In addition to that, the company has fallen behind Facebook Inc., which joined the S&P 500 last December.
The company’s stock price has plummeted in recent days after announcing a $5 billion stock offering. In addition, one of its biggest shareholders reduced its stake in the company. The stock price dropped as much as 8.6% intraday before pulling a U-turn and closing the day 2.8% higher. Despite these factors, Tesla’s stock price is down a third from its record highs since the beginning of the year.
Investors are also concerned about the impact of higher interest rates on future earnings. With the market sagging, previously-favored growth stocks have also taken a beating. Alphabet Inc and Microsoft Corp both sank ahead of their earnings reports. With about a third of the S&P 500 set to report results this week, the outlook is still unclear.
