Tesla Earnings Are Coming. They Better Be Good.
Jan 26, 2022
Tesla stock trading has been a wild ride recently. It's about to become much crazier, as the electric car business is scheduled to publish fourth-quarter profits after Wednesday's closing of the market.
Tesla (TSLA) investors are anticipating a significant earnings beat. They'll also want to hear from CEO Elon Musk.
For the fourth quarter, Wall Street anticipates earnings of around $2.33 per share on $17.1 billion in revenue. These figures serve as a baseline for what Tesla needs to achieve better than it did on Wednesday.
These figures have been steadily increasing as the corporation exceeded delivery expectations. In the fourth quarter, Tesla delivered more than 308,000 automobiles. Wall Street anticipated a sale of closer to 270,000 units.
In late December, before the high delivery data were announced, the consensus fourth-quarter profits forecast was around $1.94 per share. According to FactSet, the greatest profit forecasts at the time were around $2.60 per share. At the moment, the greatest estimate is around $3 per share.
It could take something close to the high projection of $3 to lift the stock. Tesla announced third-quarter earnings of $1.86 per share, above the average forecast of $1.62 and coming near to the high end of the range of roughly $1.95 per share.
Tesla shares jumped 3.3 percent following the company's third-quarter earnings beat on a day when the S&P 500 gained around 0.3 percent, and the Dow Jones Industrial Average was flat.
What it will take to propel the stock higher or lower at this point is truly anyone's guess. Recently, the stock has been quite volatile. Shares increased 13.5 percent after delivery outcomes but have since lost roughly 14% year to date. Fears of inflation, increasing interest rates, and a possible economic downturn have hit shares of expensive technology companies like Tesla.
Down 14% is not all that horrible. The Nasdaq Composite is also down around 14% year to date, and Tesla stock is often more volatile than the broader market.
Tesla stock is expected to move more than 10%, either up or down, following results. This reflects the market's present state of uncertainty. Tesla shares have moved an average of around 3.5 percent higher or lower the day following the company's last four quarterly earnings announcements.
Earnings will be significant, but they will not be the only factor affecting Tesla stock on Wednesday evening and Thursday early. Musk is scheduled to participate in the company's quarterly earnings conference call. Musk ceased participating in conference calls in mid-2021 and skipped the third-quarter call.
Musk is on hand to provide an update on the product. That may include providing an update on Cybertruck's development timeline or announcing plans for a new, lower-priced EV model that expands Tesla's product selection into new vehicle sectors. The arrival of a new model or the Cybertruck on public roads in late 2022 would be considered positive news.
Musk may possibly discuss the establishment of additional capacity in Germany and Texas. Wedbush analyst Dan Ives feels that the manufacturing ramp-up would be critical in the coming months for the stock. In 2022, the total capacity of these two new factories is estimated to be a few hundred thousand cars.
"Expanded output is one thing, but it is meaningless without demand," RBC analyst Joe Spak stated in his earnings preview report. He does not see a demand deficit for EVs in 2022, though, and concurs with Ives that 2022 will be all about increasing Tesla stock production.
Musk may also discuss new batteries for his electric vehicles. Tesla is increasing the size of its battery cells in the belief that this would reduce costs and improve car performance. When the bigger cells will be integrated into cars is unknown.
Wednesday will be an eventful day. Recent market volatility only serves to heighten the drama around a Tesla earnings announcement.