Tesla’s earnings for the fourth quarter and full year 2022 are just around the corner, with Wall Street expecting the electric vehicle maker to post revenue of $24.03 billion for the quarter and adjusted earnings per share to be around $24.03 billion. 1.13, according to data from Yahoo Finance. If Tesla meets that revenue estimate, it would mean a record for the company, but also the slowest growth rate since mid-2020.
As usual, Tesla will share its results Wednesday after market close, and management will discuss earnings and answer analyst questions during a webcast to be held at 5:30 p.m. ET.
The automaker caps off a tumultuous year in which its stock price fell 65% due to factors ranging from CEO Elon Musk’s distraction with Twitter to fears of slowing sales in a pandemic-hit China. Tesla is expected to address these concerns, as well as recent vehicle price cuts and missed Q4 delivery estimates, during talks tomorrow.
In fact, so much has happened in Tesla land in recent months that Dan Ives, a general manager at Wedbush Securities, said the upcoming earnings call and guidance commentary is “one of the most important moments in Tesla history and for Musk himself.”
Before we dive into our expectations for the call, we should note that Tesla shares closed Tuesday at $143.89, up more than 30% since earlier this month after losing two-thirds of their value as of April 2022.
A performance by Musk
Musk doesn’t always join Tesla’s earnings calls — and in fact is currently defending himself in court over claims he defrauded investors with his infamous 2018 “funding secured” tweet — but the CEO is expected to appear tomorrow, though if only to allay investors’ fears that he hasn’t been giving Tesla enough attention since he took over Twitter.
The executive also went to court in November to defend his $56 billion Tesla pay package after a shareholder filed a lawsuit to revoke the deal, which he said was unfairly given to Musk, a “part-time CEO.”
Missed delivery estimates
During Tesla’s third-quarter earnings call, Musk promised Tesla would deliver an “epic end to the year.” The automaker set record sales and vehicle deliveries, but still missed its own estimates and those of Wall Street. Fueled in part by last-minute discounts on Model Y and 3 vehicles in December, Tesla delivered 405,278 vehicles in the fourth quarter. Street had expected anywhere from 420,000 to 425,000 units to be delivered.
Analysts are likely to question the company about its misses as Q4 marked the third straight quarter that the automaker failed to deliver as many deliveries as promised. Tesla may be called upon to provide more realistic estimates for 2023.
We may also see updated Q4 shipment and sales numbers when earnings are released.
Margins on vehicle price reductions
Earlier this month, Tesla lowered the price of its Model Y long-haul crossover (20% to $52,990) and Model 3 sedan (14% to $53,990) for US buyers. The vehicles’ new, lower base price makes them eligible for the $7,500 federal tax credit under the Inflation Reduction Act (IRA), which was signed into law in August. Under the terms of the IRA, the threshold is $55,000 for electric sedans and $80,000 for SUVs, pickups, and vans.
Tesla also lowered the prices of its Model S sedan and Model X, which are still too expensive to qualify for the EV tax credit.
The most recent price cuts mark at least the fourth time the automaker has discounted its vehicles or offered credits in recent months. Tesla announced price cuts in China of up to 9% on the Model 3 and Model Y in October, slashing prices by nearly 14% earlier this month. The company also first discounted $3,750 for Model Y and 3s in the US and Canada in early December before increasing to $7,500 later in the month.
Investors weren’t happy with the price cuts, which they said signaled declining demand for the iconic EVs. However, the price reductions appear to have boosted demand for the vehicles. What investors hope to gauge is whether the price cuts have eroded Tesla’s margins too much. It may be too early to have those answers, but Tesla will likely offer some advice.
Updates on new gigafactories
Tesla on Tuesday announced plans to invest $3.6 billion more at its Nevada gigafactory, adding two new facilities dedicated to building battery cells and Tesla Semis. The automaker could discuss these plans further, such as when they hope to break the facilities and start production.
The automaker has said it has a multi-year plan to increase production by 50%, so analysts will be eager to hear about other new gigafactories. There are reports that Tesla is planning a $10 billion mega factory in Mexico, and the company is closing in on a deal to build factories in Indonesia as well.
More about the Semi and Cybertruck
Tesla finally unveiled its first production versions of the long-delayed electric Semi in December, handing over the first few of Pepsi’s order of 100 trucks, which the company ordered in 2017. A number of high-profile companies including Anheuser-Busch, Pepsi, Walmart and UPS have also reserved Semis, so we may get some updates on production and when those companies can expect deliveries.
Tesla’s Cybertruck has also suffered multiple delays, but Musk said in July that the company was on track to launch the truck in the middle of this year. We expect further updates on timing, as well as new features. In September, Musk said the Cybertruck would be “watertight enough to serve as a boat briefly.”