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Tesla TSLA earnings Q3 2022

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Tesla reported third-quarter earnings after the bell, and executives addressed a broad range of questions through the earnings call, including macroeconomic concerns and CEO Elon Musk’s pending takeover of Twitter.

Shares fell by about 5% after hours following the outcomes.

Listed here are the outcomes.

  • Earnings: $1.05 vs 99 cents per share (adjusted) expected, based on analysts polled by Refinitiv
  • Revenue: $21.45 billion vs $21.96 billion expected, per Refinitiv.

Tesla’s net income (GAAP) for Q3 2022 reached $3.33 billion, with automotive gross margins holding regular at 27.9%, exactly where it stood within the second quarter of 2022. In the course of the same period last 12 months, Tesla reported $1.62 billion in profits.

On an earnings call on Wednesday to debate the outcomes, Musk answered shareholder questions on electric vehicle demand and a possible share buyback.

“I can not emphasize enough we’ve got excellent demand for Q4 and we expect to sell every automotive that we make for as far into the long run as we will see,” Musk said. “The factories are running at full speed and we’re delivering every automotive we make, and keeping operating margins strong.”

Tesla is prone to do a “meaningful buyback” next 12 months, he added, potentially between $5 billion and $10 billion pending board approval.

He also said, optimistically, “I’m of the opinion that we will far exceed Apple‘s current market cap. The truth is I see a possible path for Tesla to be price greater than Apple and Saudi Aramco combined. That does not imply it is going to occur or might be easy.”

Shareholders asked Tesla executives about macroeconomic issues impacting their business in and beyond China.

“China is experiencing a recession of sorts” mostly within the property markets, Musk said, “and Europe has a recession of sorts driven by energy.” He added, “North America’s in pretty good health, although the Fed is raising rates of interest greater than they need to, but I believe they’ll eventually realize that and convey them down again.”

In response to a unique query, Musk also talked about his pending acquisition of Twitter, saying “I believe it’s an asset that has type of languished for a very long time but has incredible potential.” He later added, “The long-term potential for Twitter is an order of magnitude greater than its current value.”

Musk is anticipated to sell a portion of his considerable shares in Tesla to assist finance the close of that $44 billion take private deal.

Q3 earnings details

Tesla’s automotive revenue got here in at $18.69 billion, a rise of 55% from a 12 months ago. Cost of revenue for the corporate’s core automotive business rose to $13.48 billion through the quarter, up from $10.52 billion through the second quarter, according to the rise in automotive sales. Tesla’s automotive regulatory credits made up 1.5% of automotive revenues at $286 million for the quarter.

Tesla reiterated previous guidance in its shareholder deck on Wednesday, saying: “Over a multi-year horizon, we expect to realize 50% annual growth in vehicle deliveries.”

The corporate reiterated that deliveries of its Semi electric heavy duty truck will begin in December, and confirmed that it’s producing the Semi in Nevada, where it produces battery packs for its vehicles within the US. The Semi was first announced in Dec. 2017.

Tesla offered no firm timeline for the beginning of production of its Cybertruck pickup, saying only that it could be produced in Texas after the ramp-up of Model Y production there.

The corporate previously reported that its deliveries for the quarter ending September 30 reached 343,000 and vehicle production reached 365,000. Deliveries are the closest approximation of sales reported by Tesla. Shares have dipped greater than 17% since that weekend report on October 2.

While vehicle production and deliveries have grown, service has not kept pace and has been a sore spot for a lot of Tesla owners.

CEO Elon Musk said, in July, that he was, “Excited to work with Tesla Service to enable same-hour service as often as possible! Applying Formula 1 pit crew techniques to Teslas.”

But Tesla increased its store and repair center locations by just 6% within the third quarter, adding 41 recent locations versus the second quarter of 2022. It added more mobile service vehicles to its fleet, nonetheless, which service technicians use to drive to repair customers’ cars on-site when possible. As of the top of the third quarter, Tesla said it was operating 728 store and repair locations, with a fleet of 1,532 mobile service vehicles.

Services and other revenue, which incorporates fees for patrons powering up their cars at Tesla Supercharging stations, sales of Tesla-branded merchandise, and repairs for patrons’ cars out of warranty, rose to $1.65 billion.

In its Q3 earnings release, the corporate warned a few bottleneck in transportation capability for delivering recent cars in the ultimate weeks of the quarter, and said it was “transitioning to a smoother delivery pace.”

Tesla’s energy unit generated $1.12 billion in revenue for the quarter. This division sells backup batteries for residential, industrial and utility use, and installs solar rooftops.

Energy revenue growth got here mostly from sales of energy storage systems. The corporate said it installed energy storage systems with a capability of two,100 megawatt-hours (or 2.1 gigawatt hours) through the quarter and noted, “Demand for our storage products stays in excess of our ability to provide.”

Tesla’s energy division competes for battery cell supply with its automotive division and versus other electric vehicle makers. Tesla wrote, in its shareholder deck, “We proceed to consider that battery supply chain constraints might be the primary limiting factor to EV market growth within the medium and long terms.”

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