Tesla expects to miss 2022 delivery targets as third-quarter revenue trails Wall Street estimates
- CEO Elon Musk downplays concerns about slowing economy after third-quarter sales trailed Wall Street consensus
- Stock has declined 37 per cent this year in New York versus a 23 per cent drop in the S&P 500 Index as Musk’s overpaying for Twitter rattles investors
There was excellent demand for the fourth quarter, the American billionaire said on an earnings call on Wednesday, addressing investor concern that buyers could be discouraged by the weak global economy and high prices for its vehicles. Some logistics challenges would persist, with fourth-quarter deliveries tracking under 50 per cent growth while production achieved the 50 per cent threshold.
“I wouldn’t say we’re recession proof, but it’s certainly recession resilient,” he said.
Texas-based Tesla is expanding fast despite global economic jitters, and investors are closely watching for signs that the cooling economy would hurt demand. Revenue amounted to a record US$21.45 billion,, though still trailing analysts’ estimates of US$21.96 billion, according data compiled by Refinitiv.
Its third-quarter automotive gross margin shrank to 27.9 per cent from 30.5 per cent a year earlier, missing analysts’ estimates. The firm suffered a foreign- exchange impact of US$250 million due to a stronger US dollar against major currencies.
“Raw material cost inflation impacted our profitability along with ramp inefficiencies” from its new factories in Berlin and Texas, and the production of its new 4680 batteries, Tesla said in a statement. Production of 4680 batteries was gaining traction, although challenges remained.
Musk also said Tesla has the ability to do a stock buy-back in the range of US$5 billion to US$10 billion to support its share price, pending board review and approval.
The stock fell 5 per cent in aftermarket trading to US$210 in New York. They have declined 37 per cent this year versus a 23 per cent slide in the S&P 500 Index, partly spooked by Musk’s admission that he was overpaying to buy control of social media company Twitter.
Tesla earlier this month said it delivered 35 per cent more vehicles in the July-September period than in the preceding quarter, a record that was still shy of analysts’ estimates.
Musk told analysts he saw a path for Tesla to be worth more than Apple Inc and Saudi Aramco combined. Tesla’s market capitalisation stood at just under US$700 billion, while Apple is worth US$2.3 trillion and oil producer Saudi Aramco is valued at US$2.1 trillion.
Musk has been trying to raise cash to fund his US$44 billion deal to take Twitter private. Some experts say he may need to sell about US$3 billion more in stock after the earnings announcement to help fund the deal.
Musk also said Tesla’s Cybertruck pickup truck was set to enter production in the middle of 2023, and its heavy-duty semi truck, which will begin deliveries later this year, could see 50,000 units in North America in 2024.
Additional reporting by SCMP Reporter