Tesla
Another positive development is that increased production led to margins going from 26% to 30%. This is more impressive as many companies are struggling with margin compression due to rising costs. This positive momentum has translated into its stock price breaking out to new highs while being up more than 50% since May.
Inside the Numbers
In Q3, Tesla reported earnings per share of $1.86, while analysts were looking for $1.59 per share. Revenue came in at $13.8 billion vs $13.6 billion. Tesla's stock opened 1% lower on the next day of trading but this weakness was aggressively bought as shares finished at new highs, just under the $900 level.
This was the second quarter that the company topped $1 billion in net income for the quarter and was a record of $1.6 billion. In last year's Q3, net income was $331 million. The main contributor to revenue is automotive at $12.1 billion.
Other sources of revenue were its energy business at $806 million and $894 million in services revenue which includes vehicle maintenance and repairs, auto insurance and sales of Tesla-branded merchandise.
The company did acknowledge challenges posed by semiconductor shortages, congestion at ports and rolling blackouts that have prevented Tesla from running factories at full capacity.
However, the issues didn't affect its guidance which forecasts 50% average annual growth in vehicle deliveries for many years.
Even with those issues, the company reiterated prior guidance that it expects to "achieve 50% average annual growth in vehicle deliveries" over a multi-year horizon. In Q3, the company delivered 241,300 vehicles and produced 237,823 vehicles.
The company has been slowly releasing its full self-driving package to qualified drivers. It also didn't give any firm deadline about when the Cybertruck will be available.
This also marked the first earnings quarter that CEO Elon Musk wasn't present which led to a much more sober affair.
Stock Price Outlook
EV stocks experienced massive gains last year and the start of this year. However, this resulted in a nasty crash that also took down Tesla. Now, we are starting to see higher-quality EV companies move to new highs, while the weaker ones remain depressed. Given that Tesla is executing in all cylinders in a difficult environment for manufacturers, it's hard to be bearish on the stock in the short-term and intermediate-term.
