Tesla stock price jumps 11% after electric earnings report

Posted: 21 April 2022 5:58 pm

Both top and bottom lines blew away estimates as the EV maker shrugs off persistent supply chain challenges and factory shutdowns.

Shares of Tesla (TSLA) surged higher Thursday morning after the electric-vehicle (EV) maker posted record earnings, revenue and margins. The stock was up as much as 11%, trading as high as $1,089 in the morning trading hours. It’s among the top market gainers for the day.
The EV maker surged, defying the negative investor sentiment that sent shares of rivals General Motors (GM), Ford (F), Rivian Automotive (RIVN) and Lucid Group (LCID) lower Thursday.

What happened?

Tesla reported first-quarter 2022 earnings and revenue that far-exceeded analyst estimates.
The EV-leader grew its earnings by 246% year over year to $3.22 per share, beating consensus estimates of $2.26. Revenue grew 81% over the same period last year to $18.8 billion, topping consensus estimates by $1 billion. Wall Street was expecting Tesla to post first-quarter 2022 revenue of $17.8 billion, according to data from CNN.
Tesla’ automotive revenue made up the bulk of the company’s total sales, coming in at $16.9 billion. The company also generates revenue from its energy generation and storage segment and its services segment. Automotive gross margins jumped to a record 32.9%.
It was yet another record quarter for the Tesla, which dominates the white-hot EV market with a 70% market share, according to Experian data reported by Electrek. This comes as the company, and broader auto industry, grapples with lingering supply chain constraints and production challenges. Tesla said these issues have continued to limit its ability to run at full capacity, and that it expects these supply chain challenges to persist through the rest of 2022.
But the company may begin to see some of this strain ease as it starts operation at two of its major manufacturing plants. Tesla began production and deliveries from its Gigafactory Berlin in March 2022 and its Gigafactory Texas in April 2022, which should help ease the production burden from its California and Shanghai plants. Tesla’s Gigafactory Shanghai, which produces the company’s Model 3 and Model Y vehicles, was closed in March due to rising COVID-19 cases and only recently restarted production.
Earlier this month, Tesla reported a record 310,048 vehicles delivered in the first quarter, putting it over the 1 million mark for the first time. Despite the ongoing supply chain woes and factory shutdowns, Tesla CEO Elon Musk said during Wednesday’s earnings call, “It seems likely that we’ll be able to produce over one and a half million cars this year.” Musk added that he expects second-quarter vehicle production levels to be similar to that of the first quarter but that he sees vehicle production to be “substantially higher” in the latter half of the year.

Now what?

Tesla stock is currently down about 17% from its 52-week high of $1,243.49 and down 14% so far in 2022. For a 5-year view of the performance of this stock, see the graph in our dedicated guide.
With this recent move in the stock price, shares are now trading at around an 8% premium over the average analyst target price of $953.51.
At least five analysts raised their price targets for the stock on Thursday, according to data from Benzinga. Still, the average analyst price target is below Tesla’s current stock price of around $1,035, so there could be further downside. But analyst price targets aren’t always accurate, so investors need to decide if Tesla’s future prospects warrant its current share price.
Wall Street estimates Tesla will generate second-quarter earnings of $2.34 per share on $19.1 billion in revenue. Full 2022 revenue of $83.8 billion is expected, according to data from Yahoo Finance. Tesla also said it’s confident in achieving a 50% growth in vehicle production in 2022 versus 2021. Over the long term, the company outlined a yearly production goal of 20 million cars. That’s still likely years away, though, as the company produced just shy of 1 million vehicles in 2021.
Nonetheless, Tesla continues to prove it’s a force to reckon with in the EV space. The company’s profits more than tripled to $3.7 billion in the first quarter. Investors will be looking to see if Tesla can maintain this amid rising raw materials and commodity costs, which the company acknowledged has already impacted its cost structure.

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At the time of publication, Matt Miczulski owned shares of TSLA, GM, RIVN and LCID.

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