Tesla Stock Slides As Q3 Revenue Miss, Flat Margins Clouds Earnings Beat

Tesla is holding to its full-year production forecasts despite softer-than-expected third quarter sales and ongoing profit margin pressures.

Updated at 5:30 pm EST

Tesla  (TSLA) – Get Tesla Inc. Report posted better-than-expected third quarter earnings Wednesday, but overall revenues missed Street forecasts, while profit margins were flat to the prior period, suggesting a challenging backdrop for the clean energy carmaker heading into the final months of the year.

Tesla said adjusted earnings for the three months ending in September were pegged at $1.05 per share, up nearly 70% from the same period last year and 5 cents ahead of the Street consensus forecast of $1.00 per share.

Group revenues, Tesla said, rose 56% from last year to $21.45 billion, falling shy of analysts’ forecasts of a $21.96 billion tally and but firmly ahead of the $16.94 billion notched over the second quarter.

Gross automotive margins were 27.9%, a 600 basis point decline from last year, Tesla said, and flat to the figure recorded over the second quarter, owing to put a surge in input costs and expenses linked to the ramp-up of new factories in Austin and Berlin.  

“We remain focused on increasing vehicle production as quickly as possible, by increasing out weekly build rate in Fremont and Shanghai and progressing steadily through the production ramps in Berlin and Texas,” Tesla said in its earnings presentation. “Logistics volatility and supply chain bottlenecks remain immediate challenges, although improving.”

“We continue to believe that batter supply chain constraints will be the main limit factor to EV market growth in the medium and long terms,” Tesla added. “Despite these challenges, we expect to continue to deliver every vehicle produced while maintaining strong operating margins.”

Tesla shares were marked 3.73% lower in after-hours trading immediately following the earnings release to indicate a Thursday opening bell price of $213.74 each. 

Tesla also reiterated summer estimate that deliveries will grow 50% from 2021 levels. That implies a target of 1.4 million vehicles for the full year, a figure that Tesla CFO Zachary Kirkhorn said has become “more difficult but remains possible with strong execution.”

Hot production numbers from China where Tesla re-started its Shanghai giga factory following scheduled maintenance in July, helped third quarter deliveries hit 343,830 units for the three months ending in September, a 42% year-on-year increase and the highest total ever recorded for the Texas-based automaker but modestly below analysts’ forecast.

Demand, however, is expected to wane over the final months of the year as China, the world’s biggest EV market, remains choked by Beijing’s ‘zero Covid’ policies and countries in Europe and north America pull back on big-ticket spending amid looming recession fears and the ongoing surge in energy prices

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