Tesla (Nasdaq: TSLA) shares were lower by about 3% following the company's Q3 earnings report which showed a beat on the bottom line and a miss on the top line. It's interesting to note the stock price's middling reaction and more than 50% YTD losses despite the company being in a much better position from a financial and operating perspective.
The most tangible way to see this is through the company's fixed car per costs mildly declining, while its total revenue is increasing. The company also seems to believe that the worst of supply chain issues and bottlenecks are in the rearview mirror. True to form, Musk also made some bold predictions about the future including a proclamation that Tesla's value could exceed Saudi Aramco and Apple's (Nasdaq: AAPL) combined.
Inside the Numbers
In Q3, Tesla reported $1.05 in earnings per share which topped expectations of $0.99 per share in earnings. Net income was up nearly 100% to $3.3 billion from $1.6 billion last year. Revenue was up 57% compared to last year but missed expectations at $21.5 billion vs $22.0 billion. Notably, automotive gross margins held steady at 27.9%.
On the conference call, CEO Elon Musk was confident that demand would remain strong in Q4 and exceed its production capacity. He also said that the company would do a share buyback between $5 billion and $10 billion next year, pending approval from the Board of Directors.
In terms of foreign markets, Musk said that China and Europe are dealing with a recession that has impacted demand. He noted that the North American market remains strong but that the Fed's rate hikes could push the US economy into a recession.
The company reiterated its previous guidance and said that they expect to achieve 50% annual growth in vehicle deliveries. And, it also is predicting that deliveries of its Semi electric heavy-duty truck will begin in December in Nevada. It didn't provide any updates on the Cybertruck. For the quarter, the company had total deliveries of 343,000 with vehicle production of 365,000.
Overall, Tesla shares are down 39% YTD. The combination of a more than 100% increase in earnings and the decline in its stock price is resulting in a forward P/E of 36.