Tesla earnings preview: Eyes on run rates, margins and free cash flow
Xiaolu Chu
Tesla (NASDAQ:TSLA) is due to report earnings after the closing bell on Wednesday to expectations for revenue of $16.9B and EPS of $1.80 for a quarter disrupted by COVID-related slowdowns in Shanghai. 18 of the last 22 EPS revisions from analysts since the last earnings report have been to the downside.
The electric vehicle giant has already reported on Q2 deliveries, so a major focus will be on the expected production run rates out of Berlin and Austin for the rest of the year. Margins are also a big consideration. Prices for Tesla (TSLA) vehicles are up 25% to 30% from a year ago, but it's unclear if that is keeping pace with inflation costs, especially after Elon Musk warned Austin and Berlin were money furnaces because the production ramp has been slowed by supply chain issues. Also watch if Tesla's Q2 free cash flows number surprises to the upside or disappoints. The consensus estimate for free cash flow was $2B at the beginning of the quarter, but is now down to $500M. New Street Research analyst (and strong bull) Pierre Ferragu forecasts Tesla (TSLA) might only break even in terms of free cash flow for the quarter.
Deliveries guidance from TSLA has been vague for the last year, but Wedbush Securities thinks the automaker is on pace to still increase deliveries by 50% this year even with China essentially shut down for 2 months. Analyst Dan Ives thinks reiterated full-year deliveries guidance could boost the long-term EV demand thesis around the stock.
Ahead of the TSLA earnings report, Electrek reported that Tesla Energy had its best quarter in years for residential solar in the U.S. with 71.5 MW. The final number could be even higher with further deployment in the commercial market and other regions.
The conference call is likely to include Elon Musk and could veer away from financials and production into some talk on battery technology, FSD, staffing, the upcoming AI Day or even the thinking on the Bitcoin holdings on the balance sheet. Musk is unlikely to say much or anything about Twitter deal.
Tesla (TSLA) has beat consensus revenue expectations in ten straight quarters and topped EPS marks in five straight quarters.
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Comments (51)
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:)btw TSLA is the SOLE stock that Wood got 'right.'
IMO TSLA is the sole stock that Wood bought that MR MARKET HAS GOT WRONG.Perfectly flawless and rational argument to reconcile Wood as a 100% dud, and Mr Market 99% right, as it should be.PS TSLA is the SOLE stock that Wood got 'right.' in her entire ARKK.
See attribution analysis of ARKK for yourself.
ark-funds.com/...
Why?
-we have heard MUSKRAT repeating last month that Berlin and Austin are "gigantic money furnaces right now."
-cos street estimates have hardly budged in last 90 days, down v little from 90 Days Ago of $2.34
-how can margins slip SOO LITTLE with a fixed cost base like Tesla's ?
-the only positive could be the rabbit of reg credits to save the bacon for 2q, and REMEMBER booking of reg credits is LARGELY AT MGMT DISCRETION !
-the other marginal positive is higher Model s/x in mix, which will raise avg ASPAS FOR THE 50% SECULAR REVENUE GROWTH RATE:
There is no way in hell after q2, continuing chip shortage, hiccups at Berlin and Austin, that Tesla will deliver 1.4m cars in 2022;
You can mark le post
“ i have reasonable conviction Tesla will disappoint the street consensus of $1.98”
Unfortunately for you bad guess;
Happily for myself & other longs TSLA is performing well
There are other stocks, same stuff from them everyday, plus Dans
Negative mouth, don’t watch it like I used to.
We already have Cathie's analysis using her Monte Carlo simulations showing a bear-case valuation of 3,000 per share.
Let's see: let's take Tesla's 55b revenue from FY21. Let's put in a 10% free cashflow margin and assume that revenues will grow 50% per year for 10 years.
Let's assume that Tesla will trade at a P/FCF multiple of 20 by then.
Discounting at 10%, you then get 3,000.
All very realistic for a car company.
Cathie, you are a m0r0n.
Tesla bag holder wannabes, you too.
#2- $LNG
#3- $DXCM
#4- $EXAS
#5- $NXST
#6- $MKTX
#7- $TREE
#8- $NBIX
#9- $NFLX
#10- $DPZWho is in second place? $LNG is in second place. Missing, of course, from the Top 10 over the last decade is $TSLA. Again, the decade covered is from 2010 to 2020.Not sure where $TSLA ranks as this article only covers the top ten.www.kiplinger.com/...Cheers and Stay Long!
Margins... down.
Credits... down.
Expenses... up.
BTC... ($500) million.
Profits... down.The above is already priced in. Investors are already looking for H2 2022.An upside on margins is a possibility though because of the numerous price increases during the last 3 quarters.
