Tesla Earnings: Profit, Sales Fall Short Of Estimates As Margins Dwindle

Topline

Tesla posted weaker than anticipated financial results last quarter as Elon Musk’s electric vehicle titan grapples with slowing growth.

Tesla deliveries registered a rare decline during Q3.

Anadolu Agency

Key Facts

Tesla’s $23.4 billion in sales during the three-month period ending September 30 came in below consensus analyst forecasts of roughly $24.2 billion, according to FactSet, while its $0.66 earnings per share fell short of estimates of $0.72.

Its 9% year-over-year revenue growth was its weakest since 2020’s second quarter.

Shares of the automaker slid as much as 7% after suffering a 5% loss during Wednesday’s trading session.

Tesla, which reported earlier this month it delivered 435,059 vehicles during the period, its second-highest total ever but a decline from Q2 and below analyst expectations, reported $1.8 billion in operating income last quarter, a 52% year-over-year decline.

The slimmer profits came even after an unanticipated spike in automotive regulatory credits, essentially all-profit payments Tesla gets from gasoline-powered car manufacturers which have long been crucial to the company’s historically strong profitability; these revenues nearly doubled on an annual basis to $554 million last quarter.

Key Background

Tesla stock exploded more than 1,300% between March 2020 and November 2021, when its share price peaked at $410 on a split-adjusted basis as profits for the young automaker proved robust. But dark days were ahead for Tesla investors in 2022, with shares slipping 65% to just above $100 as the stock market generally slumped. Though that came during a broader market downturn as elevated interest rates weighed on growth prospects, much of Tesla’s rut was tied to Musk’s purchase of Twitter—funding his $44 billion social media acquisition by offloading $22.9 billion of his Tesla stake between April and December 2022 and fueling frustration among some analysts, shareholders and even a board member by overseeing controversial changes at the social media firm. But Tesla stock turned a new leaf as the calendar turned to 2023, riding a series of strong earnings reports to a more than 130% gain, making it one of the S&P 500’s top five performers.

Surprising Fact

Tesla shares have risen an average of 6.9% in the 10-day period following the company’s last 10 earnings reports, though shares suffered 8% and 9% drops after its last two reports.