Profit, Sales Fall Short Of Estimates As Margins Dwindle

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Topline

Tesla posted weaker than anticipated financial results last quarter as Elon Musk’s electric vehicle titan grapples with slowing growth.

Key Facts

Tesla’s $23.4 billion in sales during the three-month period ending September 30 came in below consensus analyst forecasts of roughly $24.2 billion, according to FactSet, while its $0.66 earnings per share fell short of estimates of $0.72.

Its 9% year-over-year revenue growth was its weakest since 2020’s second quarter.

Shares of the automaker were flat after suffering a 5% loss during Wednesday’s trading session.

Tesla, which reported earlier this month it delivered 435,059 vehicles during the period, its second-highest total ever but a decline from Q2 and below analyst expectations, reported $1.8 billion in operating income last quarter, a 52% year-over-year decline.

The slimmer profits came even after an unanticipated spike in automotive regulatory credits, essentially all-profit payments Tesla gets from gasoline-powered car manufacturers which have long been crucial to the company’s historically strong profitability; these revenues nearly doubled on an annual basis to $554 million last quarter.

Key Background

Tesla stock exploded more than 1,300% between March 2020 and November 2021, when its share price peaked at $410 on a split-adjusted basis as profits for the young automaker proved robust. But dark days were ahead for Tesla investors in 2022, with shares slipping 65% to just above $100 as the stock market generally slumped. Though that came during a broader market downturn as elevated interest rates weighed on growth prospects, much of Tesla’s rut was tied to Musk’s purchase of Twitter—funding his $44 billion social media acquisition by offloading $22.9 billion of his Tesla stake between April and December 2022 and fueling frustration among some analysts, shareholders and even a board member by overseeing controversial changes at the social media firm. But Tesla stock turned a new leaf as the calendar turned to 2023, riding a series of strong earnings reports to a more than 130% gain, making it one of the S&P 500’s top five performers.

Surprising Fact

Tesla shares have risen an average of 6.9% in the 10-day period following the company’s last 10 earnings reports, though shares suffered 8% and 9% drops after its last two reports.

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