Tesla Q3 2022 Earnings: Revenue Miss Takes a Toll But Musk Expects the EV Giant to Grow Bigger Than Apple and Saudi Aramco Combined [Updated]

Rohail Saleem
Tesla Q3 2022 Earnings

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

As Tesla (NASDAQ:TSLA) contends with a veritable volley of short-term challenges, ranging from Musk's Twitter takeover overhang to uncertainty around the outlook for fourth-quarter deliveries amid weakening global demand, the EV giant has now announced its earnings for the third quarter of 2022.

Tesla (NASDAQ: TSLA) Q3 2022 Earnings

Tesla has reported $21.454 billion in revenue for the third quarter of 2022, missing consensus expectations of $21.96 billion.

Related StoryRohail Saleem
LVMH’s Bernard Arnault Wears the Crown Again: Elon Musk Is No Longer the World’s Richest Man as Tesla Hits a Rough Patch
Revenue Comparison
Q3 2021
Q2 2022
Q3 2022
0
3
6
9
12
15
18
0
3
6
9
12
15
18
Automotive Revenue
12.1
14.6
0
Total Revenue
13.8
16.9
21.5

(All figures are in billions of dollars)

Tesla identified US dollar strength as a major challenge to its top-line metric during the quarter.

The following snippet summarizes the EV giant’s production activities during the period:

Tesla Operations Summary

The company has reported automotive gross margin of 27.9 percent during the quarter.

Automotive Gross Margin
Gross Margin
0
6
12
18
24
30
36
0
6
12
18
24
30
36
Q3 2021
30.5
Q2 2022
27.9
Q3 2022
27.9

(All figures are percentages)

Tesla has reported $1.05 in non-GAAP (adjusted) EPS, beating consensus earnings expectations of $1 per share.

EPS Comparison
EPS
0
1
2
3
0
1
2
3
Q3 2021
1.9
Q2 2022
2.3
Q3 2022 Consensus
1
Q3 2022 Actual
1.1

(All figures are in dollars)

The company has identified higher raw material costs and production ramp up of 4680 cells as major challenges to its bottom-line metric during the quarter.

The following snippet summarizes Tesla’s latest guidance:

Tesla Guidance

While revealing its earnings for Q2 2022, Tesla notified that it liquidated 75 percent of its Bitcoin stash by the end of the quarter, with such disposals netting $936 million in Q2 alone. Elon Musk, however, did provide a qualifier that Tesla might again start adding to its Bitcoin stash in the future and that the company still held all of its stake in Dogecoin. Tesla did not sell any Bitcoin during Q3 2022.

Heading into Q3 2022 earnings, there was a roughly 50-50 probability that Tesla would announce a share buyback program to offset the Twitter overhang. Musk revealed during the earnings call that the EV giant might implement a $5 billion to $10 billion share buyback program next year.

In other updates, Musk expects Tesla to eventually grow bigger than Apple and Saudi Aramco combined. Moreover, the Cybertruck has now entered tooling phase, with deliveries expected to commence by the middle of 2023. Deliveries of the Tesla Semi are expected to commence in December 2022, with the company expecting to sell 50,000 units in North America in 2024.

At the time of writing, Tesla shares are down nearly 4 percent in after-hours trading as the company missed consensus revenue expectations.

Earnings Context

Apart from the ongoing carnage in the broader market, Tesla shares are currently suffering from two critical short-term challenges. First, as we noted in a dedicated post, Elon Musk has to secure $24.51 billion in equity financing for his Twitter takeover deal. So far, he has accumulated $15.4 billion by selling a part of his Tesla stake in two distinct liquidation waves, with the first one occurring in April – May and the second one taking place back in August. He has also secured $7.1 billion in equity commitments from the likes of Larry Ellison, Binance, Sequoia, the Saudi Prince Al Waleed, etc. However, this still leaves a $2 billion deficit without accounting for Twitter’s RSUs – which will increase the funding shortfall to around $5.4 billion. Musk will likely plug this shortfall by further paring his Tesla stake, hence the current downward pressure on the stock.

As far as the second major headwind is concerned, Tesla missed analyst expectations regarding its Q3 deliveries. While the quarterly production at 365,923 came in higher than Bloomberg’s estimate of 359,853 units, the reported deliveries of 343,830 units missed the consensus number of 357,938. Tesla cited logistical constraints for falling short on its quarterly deliveries. However, given the ongoing global macroeconomic weakness and the softening of demand, especially in China, which is a critical market for Tesla, the stock has remained under pressure so far this month.

Share this story

Deal of the Day

Comments