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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.
(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:
The company has reported automotive gross margin of 27.9 percent during the quarter.
(All figures are percentages)
Tesla has reported $1.05 in non-GAAP (adjusted) EPS, beating consensus earnings expectations of $1 per share.
(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:
— unusual_whales (@unusual_whales) October 19, 2022
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.
Elon Musk on buybacks: We debated it at board level. Board thinks it makes sense to do one; It is certainly possible to do one on the order of $5b-$10b next year. It's likely we'll do some meaningful buyback.
— Sawyer Merritt (@SawyerMerritt) October 19, 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.
$TSLA investors asking about Gordon Haskett report that Musk still $8B equity short to complete $TWTR deal. I est $5.4B needed incl. RSUs. Many fail to excl 73.1M TWTR shares Musk owns. Not clear if Elon has margin capacity (TSLA policy 25% max margin) with TSLA -42% since April. pic.twitter.com/sFnB3fLByL
— Gary Black (@garyblack00) October 18, 2022
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.