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Amid inflationary pressures, parts and semiconductor chip shortages exacerbated by the ongoing pandemic and Russia’s brutal invasion of Ukraine, Tesla global vehicle inventory dwindled to a three-day supply in the first quarter of 2022. That’s down from a four-day supply of global vehicle inventory in the previous quarter, and eight-day supply during the first quarter of 2021.
“Our own factories have been running below capacity for several quarters,” Tesla said in its shareholder deck. The company did not give detailed guidance on deliveries going forward, but said it expects 50% annual growth on a multi-year basis, and warned that supply chain constraints are likely to continue through 2022. Musk also said that he believes inflation is worse than reported, and will continue through the year.
Musk’s recent proposal to acquire Twitter was not discussed on the call.
Tesla Q2 2022 Deliveries
As usual, Tesla already disclosed its Q2 vehicle delivery and production numbers, which drives the vast majority of the companys revenue.
This is the first time in a long time that Teslas deliveries were down and it is due to lockdown restrictions in Shanghai forcing the automaker to shut down Gigafactory Shanghai for weeks during the quarter.
Delivery and production numbers are always slightly adjusted during earning results
Tesla Q1 2022 Earnings Preview: Heres What To Expect
Tesla is set to announce its first-quarter 2022 financial results tomorrow, April 20, after the markets close. As usual, a conference call and Q& A with Teslas management is scheduled after the results.
Here well take a look below at what both the street and retail investors are expecting for the quarterly results.
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Tesla’s Q2 Financial Data Preview
Taking a look at the company’s financials, Tesla needs to report 25% year-over-year growth to beat earnings-per-share expectations of $1.82.
In terms of revenues, experts anticipate 42% year-over-year growth, which would imply around $17 billion.
Tesla made clear in its outlook that it continues to execute initiatives to reduce the high costs of its operations. It also expects hardware-related profits to be accompanied by an acceleration of software-related profits.
Credit Suisse analyst Dan Levy believes that Tesla’s Q2 gross margins have been hit hard by lockdowns in China, and that this may worry investors. Levy expects margins to come in around 23%, which would be about 7% below what was reported in Q1.
Regarding Tesla’s cash position, the company claims that it has enough liquidity to fund its product roadmap, its long-term production expansion capacity, and other costs.
However, macro pressures and the risk of an impending recession may lead Tesla investors to look more cautiously at its free cash flow data. In Q1, Tesla reported FCF of $2.2 billion, half-a-billion dollars lower than in Q4.
Should You Buy Tesla Stock Ahead Of Earnings
Tesla‘s – Get Tesla Inc. Report second-quarter earnings report is just around the corner. The company will release its results on July 20 after the market closes.
Suffering from several headwinds, including supply-chain disruptions and the risk of recession, Tesla shares are already down nearly 40% in 2022 alone.
Could the Q2 earnings release be a good opportunity for Tesla to reverse its poor performance in the first half of the year?
Figure 1: Should You Buy Tesla Stock Ahead of Earnings?
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Other Expectations For The Tsla Shareholders Letter And Analyst Call
In the shareholders letter and the following conference call, Tesla generally shares additional details about not only financial results, but also other important metrics on how the company is doing.
While the quarter was difficult for Tesla, it looks like its already behind them with Tesla already reporting that June was the automakers best month for production ever.
I think a lot of the questions are going to look forward to things like production ramps at Gigafactory Texas, Berlin, and Shanghai.
The level of information coming out of the earnings will likely depend a lot on whether or not Musk is going to be on the call, which he said he will not always be on going forward. He would make sense for him to be on this time considering that Tesla has let go of many employees this quarter and shareholders and analysts are likely going to have a lot of questions about that.
If Musk is there, I think he will have to field some questions about Teslas upcoming AI Day on September 30, which is likely going to be Teslas next big event.
When it comes to Tesla Energy, we do have some rare data ahead of the results. Electrek reported that Tesla had its best quarter in years for residential solar in the US with 71.5 MW. The final number will be higher with some deployment in the commercial market and other regions.
The FSD Beta program is also critical and investors will want an update on that front.
Tesla Q2 2022 Conference Call Transcript
Tesla’s earnings results conference call is set to kick off at 5:30 p.m. EDT. Keep an eye on this article for a transcription of the earnings call right here.
Asif Khan is the Luminary and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary’s Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.
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Teslas Earnings Are Impossible To Predict Watch These 2 Points Instead
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No one knows what to expect, or what investors will focus on, when Tesla reports its quarterly earnings on Wednesday, but the key points to watch are clear: cash flow and demand.
Lockdowns in China to fight Covid-19 had the effect of constraining production at Tesla , as well as the entire Chinese auto industry, in the second quarter. The output lost at Teslas Shanghai plant, which is the companys most-productive factory, makes it nearly impossible to accurately project the electric-vehicle makers profits.
Where Does Battery Production Stand
With so much focus on Teslas EV production, its important not to lose sight of what keeps the cars on the road. The path to EV battery success has been challenging and its not over yet. But Tesla recently had some positive news from its battery partner Panasonic . Last week, Panasonic announced plans to built a battery production plant in Kansas. Reuters reports that By 2029, Panasonic plans to expand battery production capacity by three to four times, with most of the increase in North America.
While that is not strictly limited to Tesla, it is good news for the EV leader. Investors should be watching carefully for updates on Teslas plans to continue battery production and development. Panasonics expansion should help Tesla as the company continues to scale production.
On the date of publication, Samuel OBrient did not have any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Article printed from InvestorPlace Media, https://investorplace.com/2022/07/tsla-stock-3-things-to-watch-when-tesla-reports-q2-earnings/.
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Tesla Q2 2022 Revenue
For revenue, analysts generally have a pretty good idea of what to expect, thanks to the delivery numbers, but it is harder this quarter to adjust down instead of up this time.
The Wall Street consensus for this quarter is $16.521 billion, and Estimize, the financial estimate crowdsourcing website, predicts a significantly higher revenue of $17.186 billion.
Its rare that the range is this significant, but it is to be expected with this quarters conditions. It is also interesting that revenue estimates are not that far off from the previous quarter, despite already knowing that Tesla delivered about 50,000 fewer vehicles this time around.
Here are the predictions for Teslas revenue over the past two years: Estimize predictions are in blue, Wall Street consensus are in gray, actual results are in green:
Tesla Q1 2022 Deliveries
As usual, Tesla already disclosed its Q1 vehicle delivery and production numbers, which drives the vast majority of the companys revenue.
Thats yet another all-time quarterly record for Tesla, the seventh in a row, and a massive result for a first quarter, which is generally weaker.
Delivery and production numbers are always slightly adjusted during earning results
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Is Elon On The Call
Nine months ago, Musk announced he would generally stop participating in the quarterly call, saying it took too much of his time. That lasted exactly one quarter.
By the time Tesla reported record fourth quarter results in January, he was back on the call, though his comments appeared to do more to worry investors than assure them.
Now with concerns among some investors that Musks attention is being diverted by his bid for Twitter, will he be on the call once again? There are risks for the company either way.
From a perception standpoint, if hes not on the call, it feeds into the thesis that hes too busy with Twitter, said Dan Ives, tech analyst with Wedbush Securities. At the same time, Musk can be a loose cannon on these calls.
During the early days of the pandemic in April 2020 he lashed out at stay-at-home orders in California that temporarily shut his main factory, calling them fascist. If he makes similar comments about far more stringent lockdown rules now in place in much of China, he could anger Chinese authorities, who could make life very difficult for Tesla in the worlds largest market for electric vehicles.
Tesla Q2 2022 Earnings
Tesla always attempts to be marginally profitable every quarter as it invests most of its money into growth, and it has been successful doing so over the last two years now.
For Q2 2022, the Wall Street consensus is a gain of $1.81 per share, while Estimizes prediction is higher with a profit of $2.06 per share.
These earnings estimates are even more surprising than the revenue estimates since they point to Tesla barely slowing down on the earnings side of things despite the challenges during the quarter with Shanghai being shut down for weeks and Texas and Berlin losing a lot of money while trying to ramp up production.
Here are the earnings per share over the last two years: Estimize predictions in blue, Wall Street consensus in gray, actual results in green:
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Tesla Announces Q2 Earnings Date
Tesla has announced the date for their second quarter earnings report.
Tesla has announced the date for their second quarter earnings report: July 26, 2021.
“Tesla will post its financial results for the second quarter of 2021 after market close on Monday, July 26, 2021. At that time, Tesla will issue a brief advisory containing a link to the Q2 2021 update, which will be available on Teslas Investor Relations website. Tesla management will hold a live question and answer webcast that day at 2:30 p.m. Pacific Time to discuss the Companys financial and business results and outlook.”
Historically, Tesla has reported earnings on Wednesdays, but the company seemed to revise the schedule in Q1 2021 with a shift to Monday. Q2’s date follows suit.
Expectations
In early July, Tesla announced record quarterly deliveries of 201,250 vehicles, up 9% from Q1. Investors will be looking for record earnings as well. In Q1, Tesla reported an all-time high non-GAAP earnings per share of $0.93. Last year Tesla posted $0.44 non-GAAP earnings per share on 90,821 deliveries. Currently, analysts are expecting non-GAAP EPS of $0.94 in Q2. Consensus estimates may change as earnings approach.
Recent Activity
Tesla Financial Results: Analysis
Tesla, Inc. reported mixed Q3 FY 2021 earnings results. Adjusted earnings per share beat expectations, rising 144.7%% year over year . Revenue missed analyst forecasts but rose 56.8% YOY to a new quarterly record. Tesla also reported record profits for the quarter. Tesla’s vehicle deliveries for the quarter, which it reported earlier this month, came in at 241,300. The company’s shares fell less than 1% in after-hours trading. Over the past year, Tesla’s shares have provided a total return of 105.2%, well above the S& P 500’s total return of 31.8%.
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What To Expect From Earnings
The Wall Street’s consensus financial estimates suggest that Tesla’s revenue and non-GAAP normalized earnings per share will grow by +71% YoY and +144% YoY to $17.8 billion and $2.26, respectively in the first quarter.
Notably, there have been very marginal changes made to the Q1 2022 consensus numbers for TSLA in recent months, even after the disclosure of deliveries in early-April. Tesla’s consensus Q1 top line and bottom line were raised by +0.6% and +0.9%, respectively in the past one months. In the last three months, TSLA’s consensus first quarter revenue was revised upwards by +0.5%, while analysts increased the consensus Q1 EPS by +0.3%. This implies that the market has confidence in Tesla’s ability to deliver the results in the first quarter of this year, and I think the analysts are right.
In terms of sales volume, Tesla is likely to have been negatively affected by the COVID-19 lockdown in Shanghai, China which began on . But this should have a very limited impact on TSLA’s Q1 revenue given that the lockdown only happened in the last week of March, and this is validated by the fact that the company’s first-quarter deliveries only missed the consensus estimates marginally. But if the lockdown in Shanghai does not ease going forward, TSLA’s operating and financial performance for Q2 2022 could also be adversely affected.
Tesla Q1 2022 Revenue
For revenue, analysts generally have a pretty good idea of what to expect, thanks to the delivery numbers.
The Wall Street consensus for this quarter is $17.659 billion, and Estimize, the financial estimate crowdsourcing website, predicts a higher revenue of $17.866 billion.
An average between the two numbers would be roughly what Tesla generated last quarter , but it would represent tremendous growth versus the same period last year when Tesla delivered roughly $10 billion in revenue.
Here are the predictions for Teslas revenue over the past two years: Estimize predictions are in blue, Wall Street consensus are in gray, actual results are in green:
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Tesla Q2 2022 Earnings Release
Here are the highlights from Tesla’s Q2 2022 earnings report:
Cash
- Operating cash flow less capex of $621M in Q2
- In total, $0.8B increase in our cash and cash equivalents in Q2 to $18.3B
Profitability
- $2.5B GAAP operating income 14.6% operating margin in Q2
- $2.3B GAAP net income $2.6B non-GAAP net income in Q2
- 27.9% GAAP Automotive gross margin in Q2
Operations
- More than 1,000 vehicles produced in a single week at Gigafactory Berlin
- Highest solar deployment in over four years
SUMMARY
We continued to make significant progress across the business during the second quarter of 2022. Though we faced certain challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, we achieved an operating margin among the highest in the industry of 14.6%, positive free cash flow of $621M and ended the quarter with the highest vehicle production month in our history.
New factories in Berlin-Brandenburg and Austin continued to ramp in Q2. Gigafactory Berlin-Brandenburg reached an important milestone of over 1,000 cars produced in a single week while achieving positive gross margin during the quarter. From our Austin factory, the first vehicles with Tesla-made 4680 cells and structural battery packs were delivered to our U.S. customers. We are continuing to invest in capacity expansion of our factories to maximize production.
FINANCIAL SUMMARY
Revenue
Profitability
Cash
OUTLOOK
Volume
Cash
Profit
Product
Is Tesla A Buy
Considering that Tesla’s vehicle delivery and production data a main driver for the stock has already been released, there should be no more major news for Q2 that could send Tesla’s stock in either direction.
For the long term, the Wall Street consensus is mostly bullish on Tesla shares.
For example, Canaccord analyst George Gianarikas thinks TSLA is a buy based on its EV sales and “continued leadership.” In addition, he also thinks Tesla’s solar, energy, robotics, and other businesses should add durability to the company’s growth.
Piper Sandler analyst Alexander Potter believes that Tesla investors’ fears about the risk of competition from traditional automakers are exaggerated.
However, Bank of America analyst John Murphy, noting that Q2 deliveries came in below the consensus, believes that the competitive environment is increasing, and that it remains uncertain whether Tesla will remain a dominant player.
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Tesla Q1 2022 Earnings
Tesla always attempts to be marginally profitable every quarter as it invests most of its money into growth, and it has been successful doing so over the last two years now.
For Q1 2022, the Wall Street consensus is a gain of $2.26 per share, while Estimizes prediction is higher with a profit of $2.542 per share.
The earnings are more of a hit-or-miss since it depends on how much Tesla is spending that quarter, and with supply chain issues and costs increasing at new factories being brought online, it could be not as profitable despite the real potential for another record when it comes to revenues.
Or not. Its hard to tell, but Tesla has been consistently beating earnings-per-share expectations over the last few quarters.
Here are the earnings per share over the last two years: Estimize predictions in blue, Wall Street consensus in gray, actual results in green:
