Tesla Share Price Rises After Falling First Quarter Earnings, Musk Promises Robotaxi

  • Tesla rose 7% in premarket trading on Thursday after beating Wall Street’s estimates for revenue and earnings.
  • CEO Elon Musk said Tesla’s Shanghai Gigafactory is “coming back in full force”, signaling confidence in more production.
  • Musk announced that Tesla is targeting 2024 to produce a robotaxi without a steering wheel or pedals.

Tesla rose 7% in Thursday’s premarket session after squashing Wall Street’s estimates for revenue and earnings in its first-quarter results, and after CEO Elon Musk announced plans to build a “robotaxi” until 2024.

The world’s biggest electric vehicle maker had a better-than-expected quarter as it posted a record profit.

Quarterly revenue was $18.8 billion, beating estimates of $17.9 billion, and an 81% increase over the previous year. Earnings per share were $2.86, compared to expectations of $2.27, and adjusted earnings per share were $3.22.

Still, Tesla said it expects supply chain issues to remain a major hurdle for the rest of the year, saying its factories have been running below capacity in recent quarters.

“While the earnings season so far has been mixed, Tesla’s numbers last night did a lot to restore optimism, especially at a difficult time for the company,” Chris Beauchamp, chief market analyst at IG Group, said in a statement. a likely reference to inflationary pressures and supply chain disruptions.

Tesla’s Shanghai Gigafactory, which accounted for half of the company’s global output last year, has been impacted by a surge in COVID-19 cases in China. But after the total shutdowns imposed by the local authorities, a restart of production began.

Gigafactory “is coming back in full force,” Musk said, adding that he expects to see record production per week as long as no new problems arise.

“The worst of the supply chain disruption was also ignored – so while it’s still a bummer, it doesn’t seem to be messing the situation up as much as some feared,” Sophie Lund-Yates, equity analyst at Hargreaves. Lansdown said.

Musk said last year he would no longer appear on earnings calls, but he broke that trend this quarter. He acknowledged that the company has recently raised prices for its vehicles due to pressure from inflation, which is at a 41-year high.

“We absolutely want to make electric vehicles as affordable as possible. It’s been really hard with…inflation,” Musk said on the conference call.

He said Tesla suppliers were under severe cost pressure, with some asking for 30% cost increases. But he said he hopes Tesla doesn’t have to raise prices again, noting that current prices are for deliveries within 12 months.

“The higher vehicle prices also suggest that the group is not facing the same headwinds of inflation as others, which is testament to Tesla’s ineffable brand,” Lund-Yates said.

Separately, Musk shared details about a planned robotaxi, saying it won’t have steering wheels or pedals. He said it will be “highly optimized for autonomy” and would be a “massive growth driver for Tesla”. Tesla may hold an event next year to disclose more.

Tesla competitor Rivian warned this week that the shortage of electric vehicle batteries could become a bigger problem than the current shortage of chips for the industry. But Tesla’s automotive margins rose to a new high of 32.9%.

“While others struggle with deliveries, Elon’s company has forged ahead, and the positive stock price reaction will be taken as an endorsement of the company’s current approach,” Beauchamp said.

In early April, Tesla made a record 310,000 deliveries in the first quarter, beating Wall Street’s estimate of 309,000 deliveries.

Wedbush analyst Dan Ives said Tesla’s “Cinderella-like” delivery numbers in a brutal supply chain scenario highlights a robust trajectory of EV demand for the remainder of the year.

The Shanghai plant shutdown is the elephant in the room, according to Ives. That could cause a 50,000-unit headwind for Tesla in the quarter as “China’s COVID-zero policy continues to be a slow drop in equities,” he said.

Tesla was up 7.4% to $1,050.45 a share as of 6:50 a.m. Thursday.

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