tesla earnings: Tesla quarterly profit jumps, but revenues miss estimates

Tesla on Wednesday reported another quarter of glittering earnings growth, but shares fell on questions about the resilience of demand for electric vehicles, CEO Elon Musk’s embattled Twitter transaction, and other issues.

The electric vehicle (EV) maker’s third-quarter profit more than doubled to $3.3 billion on increased auto shipments

But shares fell in after-hours trading after the company reported revenue of $21.5 billion, up 56 percent from the same period last year but about $500 million below analysts’ forecasts.

The company pointed to bottlenecks in the battery supply chain as a constraint on EV growth, noting that logistical volatility is an “improving” challenge.

“Knock on wood, looks like we’re going to have an epic end of the year,” Musk said during a conference call.

“Factories are running at full speed and we’re delivering every call we make.”

The results follow Tesla’s announcement earlier this month that deliveries and production grew solidly in the third quarter after falling in the prior period due to a coronavirus-related factory shutdown at its Shanghai plant.

The automaker has avoided setting specific annual delivery targets, but analysts have set a target of about 1.4 million for all of 2022.

Tesla is on track to increase production by 50 percent this year but may fall short when it comes to getting the cars to buyers, CFO Zach Kirkhorn said on the earnings call.

Tesla is working to smooth out a “crazy supply surge” at the end of each quarter, Musk told analysts.

“There weren’t enough boats; there weren’t enough trains; there weren’t enough car carriers to actually carry the wave because it got too big,” Musk said.

Tesla watchers are expecting a strong fourth quarter with a restored Shanghai factory and ramping up plants in Texas and Germany.

– Immune to inflation? – But Covid-19 remains wild amid China’s continued adherence to its zero-tolerance approach to combating the virus.

Another question concerns whether Musk’s company will remain immune to macroeconomic concerns, particularly inflation.

The cheapest version, the Tesla Model 3, is currently priced at around $48,500. With US inflation showing no signs of easing, analysts are wondering whether demand for the expensive vehicles will remain resilient.

Tesla’s shares have fallen more than 16 percent since Sept. 30, just before the company released its third-quarter delivery numbers and before Musk on Oct. 4 reinstated his bid to acquire Twitter and led a process in which he was sued company for breach of contract.

In the latest move in the takeover saga, a Delaware judge stayed litigation between the parties to allow time for the $44 billion deal to close.

However, the judge has said the trial could be pushed back to November if the deal isn’t finalized by October 28.

“I’m excited about the Twitter situation,” Musk said during the conference call.

“I think it’s an asset that’s kind of languished for a long time but has incredible potential, although obviously I and the other investors are paying too much for Twitter right now.”

Some analysts are seeing Tesla stock’s decline — during a period when the S&P 500 is rising — on concerns that Musk will sell more Tesla stock to fund his purchase of the social media company.

“Despite Elon Musk’s Twitter distractions, Tesla has been fixated on identifying and mitigating disruptive issues in the auto sector,” said GlobalData analyst Daniel Clarke.

“Therefore, its results show it’s a step ahead of the competition.”

However, the analyst cautioned against this

The Chinese market may be a massive “bump in the road” for Tesla as geopolitical rivalries with the United States and Chinese electric carmaker BYD loom in its “rear view mirror.”

Tesla shares fell more than 6 percent to $208.16 in after-hours trading, despite Musk saying the company could potentially buy back billions of dollars worth of stock.

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https://economictimes.indiatimes.com/markets/stocks/earnings/tesla-quarterly-profit-jumps-but-revenues-miss-estimates/articleshow/94975625.cms tesla earnings: Tesla quarterly profit jumps, but revenues miss estimates

Russell Falcon

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