Tesla Wins, For Now – Recent Earnings and Guidance
Following Microsoft’s poor earnings call, investors were waiting diligently to see if Tesla could set a new tone for the tech industry. On Wednesday, after the bell, Tesla reported record revenues, bringing in $24.32 billion and earnings that beat analysts’ expectations. Automotive revenue saw a 33% growth year-over-year; however, their automotive gross margins did reach a new 5-quarter low of 25.9%. Despite this, good news seemed to triumph over any bad, sending Tesla stock up over 5% in the aftermarket, giving Tesla shareholders a 40% increase in just one month.
The reason for such positive numbers comes from Tesla’s actions in the previous months; last quarter, Tesla and CEO Elon Musk acknowledged declining sales prices in EVs over the past several years, which prompted them to take initiative. Along with new competition spurring in the electrical vehicle industry, Tesla had slashed their car prices globally, which they credit to be the reason for record high sales. On the earnings call, Musk claimed that Tesla has been receiving orders at about twice the rate of production, stating a target production goal of 1.8 million vehicles in 2023. With decent numbers and estimates, Tesla still maintains struggles ahead of the road. With higher-interest rates raising costs and larger competition fighting for market share, Tesla will have to work decisively to maintain their demand amidst the current economic climate. Furthermore, several investors question Tesla’s brand popularity, with Elon Musk’s purchase of Twitter and previous statements potentially corrupting their public relations.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.