Compilation | Wall Street Event
Summary
· Company's performance exceeded market expectations as expected.
· short-term guidance meets expectations.
· shares fell recently as the Federal Reserve stifled the market's rebound.
After U.S. stocks closed on Wednesday, electric car maker Tesla (TSLA) released its fourth-quarter results. The company has high expectations for the performance report, after delivering more than 308,000 vehicles, setting a quarterly sales record. When the data came out, Tesla's performance was basically in line with expectations, and its stock price was still far below its highs as recent market weakness hurt growth companies.
analysts' expectations are as low as usual. Over the past two years, the company has basically surpassed expectations for revenue and profits each quarter. Although Tesla delivered 65,000 more cars than in the third quarter, some forecasts show that the company's continuous revenue will hardly grow. In the table below, you can see a comparison of the overall income statement with my usual three situations.
author's Tesla model and actual results
author estimates and Tesla's fourth quarter letter
My overall impression is that Tesla's performance is considerable. But this is not exactly a blowout, as some bulls expect earnings per share to be well above $3, but that is not a bad result either. The gross profit margin of automobiles has risen by about 11 basis points in a row, although it is a little less than I expected, and is still higher than market expectations as usual. Overall, the total gross profit figure in my base case is only $10 million away from the actual result.
The main difference between my model and the actual situation of Tesla comes from operating expenses. In a letter to shareholders, management mentioned that "SG&A's increase was mainly due to the $340 million payroll tax exercised by CEO award options in 2012." Given that we knew a few months ago that Elon Musk was going to exercise options and sell stocks, Tesla might be able to elaborate on this potential fee in advance. Excluding this fee, Tesla's earnings may be the same as my basic situation.
Tesla did report record cash flow of nearly $2.8 billion. Of course, a large part of this is due to the increase in short-term liabilities as production increases. Free cash flow should remain strong as long as output and delivery continue to grow continuously. The net cash balance at the end of last year exceeded $10.7 billion, and management said it had enough funds to implement its current growth plan.
Management continues to stick to its "long-term growth of 50%" delivery statement, but Musk said on the call that Tesla will surpass that number. The 50% figure means there will be about 1.4 million vehicles in 2022, but the most realistic expectation is between 1.5 million and 1.6 million. The Model Ys made in Austin will be delivered to customers after final certification is completed, while Berlin is still in the licensing process. According to management, Tesla will not launch any new models this year, but will be committed to giving Semi, Cybertruck and Roadster hopes to go on sale next year.
Tesla's stock price initially fell after the financial report came out, but after a period of time, the stock price began to rebound. The current share price is $937.41, just below the average target price of $947. I think that as all analysts are rushing to raise their numbers, that average will rise in the next few days, which are too low in the first place. However, the stock price is still about $300 lower than its 52-week high, as Musk's stock sales and market weakness on the Fed's beginning to tighten its monetary policy.
Finally, Tesla's letter to shareholders was almost no surprises. Income and earnings are basically in line with my expectations, especially in the case of payroll taxes, and beyond Wall Street's always low estimates. Some investors hope that the performance will be a little higher and hope to have more specific forecasts for this year. We'll see if we get any more detailed information on the call, but the stock rose 2% in the after-hours session. In the short term, the situation may depend more on the overall market response after the Fed meeting, and I don't think investors need to change their long-term perspectives based on today's news.
earnings call summary
Elon Musk: "Looking back on 2021, it was a breakthrough year for Tesla and the entire electric vehicle. While we were fighting supply chain challenges throughout the year and everyone was working hard, last year we managed to grow our sales by nearly 90%. This level of growth is no coincidence. It is a result of the originality and hard work of multiple teams throughout the company.
In addition, we reached the industry's highest operating margin in the last widely reported quarter, reaching over 14% of GAAP operating margins. Finally, thanks to $5.5 billion in 2021 GAAP Net income, our cumulative profitability since the company was founded has become positive, and I think that makes us a real company at this point. It is an important milestone for the company.
So after a remarkable year, we are turning our attention to the future, Texas and Berlin. So we have started production in Texas and Berlin, and we started last quarter. But that is not the most important. We are more focused on when mass production and when cars can be delivered to customers. But I think it is worth noting that, as the internet has observed, we have made quite a few cars in Texas and Berlin.
So in Texas, we are making Models with structural battery packs and 4680 batteries Y, we will start delivering after the vehicle is final certified, which should be soon. In the future, we will continue to expand capacity by maximizing production at each plant and building new plants and new locations. While we are not ready to announce any new locations on this conference call, we will be looking for new locations by 2022 and may be able to announce new locations by the end of this year, which I expect.
2022, supply chains will continue to be the fundamental limiting factor for all plant output. So, chip shortages, while better than last year, are still an issue. Yes, there are multiple supply chain challenges. Nevertheless, we do expect 2022 to be more expensive than 2021. Significant growth year, easily exceeding the 50% growth in 2022.
Tesla’s basic focus this year is to expand production. So, whether it’s last year or this year, if we’re going to launch a new car, our total output will decrease. This is a very important point that I don’t think people understand. Last year, we spent a lot of engineering and management resources to solve supply chain problems: rewriting code, replacing our chips, reducing the number of chips we need, and taking chips as the center, we are able to grow nearly 90%, and at least last year almost all other manufacturers were shrinking. So, that's a good result.
But if we launched a new car last year, we would have the same total car production due to limiting factors, especially chip limits. So if we actually launched an add-on product, then it would take a lot of attention and resources to deal with the increased complexity of the add-on product, resulting in a decrease in the actual delivery of vehicles.
this year too. So, we won't launch new models this year. That doesn't make any sense because we'll still be partially restricted. However, we will do a lot of engineering and tools to build these vehicles - Cybertruck, Semi, Roadster, Optimus, and are ready to put these vehicles into production next year."
Institutional Perspective
Credit Suisse: Fundamentals solidly support stock prices Upgrade Tesla's target price to $1,025
Credit Suisse analyst Dan Levy raised Tesla's target price from $830 to $1,025 and maintained a "neutral" rating for the stock. Analysts believe favorable fundamental factors will continue to support Tesla's stock price, but he also added that non-fundamental factors also need to maintain support for stock prices.
Moody's: Tesla (TSLA.US) is expected to maintain its leading position in pure electric vehicles and raise its debt rating to "Ba1"
Moody's confirmed in the report that Tesla's prospects are still optimistic, and the company will continue to expand its scale rapidly and significantly improve its profitability.
Moody's said Tesla's financial policy may be more cautious and liquidity will remain good.However, other automakers offering more competitive pure electric vehicles could put some pressure on the company's profit margins starting in 2023, the agency added.
In addition, the rating agency also expects Tesla to deliver nearly 1.4 million cars in 2022, up from 936,000 in 2021.
JP Morgan Chase: Raises Tesla (TSLA.O) target price from $295 to $325.
Wells Fargo: Raise Tesla (TSLA.O) target price from $860 to $910.
