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Tesla earnings: News about the Cybertruck and new factories could set the tone for 2022

MarketWatch
MarketWatch
 2022-01-25
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People take pictures of the newly unveiled all-electric battery-powered Tesla's Cybertruck at Tesla Design Center in Hawthorne, California on November 21, 2019. (Photo by FREDERIC J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images) By AFP via Getty Images
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Tesla Inc. is slated to report fourth-quarter earnings after the bell Wednesday, with investors expecting a return of Chief Executive Elon Musk to the post-results call and bracing for what could be worrying news for the Cybertruck and supply-chain snags.

Musk told Wall Street last year he was unlikely to be on future Tesla (TSLA) earnings “unless there’s something important I need to say,” and he was not on the EV maker’s third-quarter call in October.

The CEO tweeted in late November he’d provide “an updated product road map” on the fourth-quarter call, prefacing that by calling 2021 the year of “a supply chain nightmare & it’s not over!”

There have been reports the Cybertruck, an unconventional-looking electric pickup truck unveiled in 2019, has been delayed.

The truck, Tesla’s first foray into an auto-body style U.S. residents have favored for decades, was expected to start production this year and reach volume production in early 2023, which already would be a few years behind schedule and several months later than electric pickup trucks by General Motors Co. (GM) Ford Motor Co. (F) and many other OEMs as well as newcomers such as Rivian Automotive Inc. (RIVN)

Related: More Electric Pickup Trucks Are Coming to Market. But Who Will Buy Them?

Tesla surprised Wall Street earlier this month with record fourth-quarter sales, which surged nearly 90% from the same period in 2020.

“All signs point to another strong quarter for Tesla, which has put together an impressive streak of earnings beats (eight of the past nine quarters),” CFRA analysts Garrett Nelson said.

The record quarterly production and sales give Tesla a “significant bottom-line leverage given the high fixed cost nature of auto manufacturing,” he said.

Focal points for earnings include Tesla’s 2022 guidance, timelines for production ramp-ups at new factories going up in Texas and Germany, especially in the face of semiconductor shortages and supply-chain issues, and next steps in its long-term growth plan to increase annual production by a factor of 40 between 2020 and 2030, Nelson said.

Here’s what to expect:

Earnings: The FactSet consensus calls for Tesla to report adjusted per-share earnings of $2.33 for the quarter. That would compare with adjusted earnings of 80 cents a share in the fourth quarter of 2020.

Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted profit of $2.50 a share for Tesla.

Revenue: The analysts polled by FactSet are calling for sales of $17.1billion for Tesla, which would compare with $10.7 billion in the fourth quarter of 2020. Estimize is expecting $17.4 billion in revenue for the quarter.

Stock price: Tesla shares have underperformed the broader index, gaining 2% in the past 12 months compared with gains of around 11% for the S&P 500 index. (SPX) The stock has lost around 4% in the past three months compared with losses of around 6% for the S&P.

What else to expect: Investors will be keen on hearing Tesla’s 2022 guidance, even if the EV maker has chosen to provide scant specifics in its guidance.

Even without that “direct guidance,” Emmanuel Rosner at Deutsche Bank is expecting a “positive update” from Tesla on growth and margins potential for 2022, and “on cadence of new product and technology.”

Other potential highlights for the quarter include timing of the production ramp-up for Tesla’s new factories in the Austin, Texas, area, and in Germany, and details about its alternative-energy business, the status of its in-house battery production, and sales in China.

With the two new factories coming on line, “Tesla should theoretically have enough capacity to exceed” production estimates, Piper Sandler analyst Alexander Potter said in a recent note. “But China’s ‘zero COVID’ policy could threaten operations in Shanghai, so we’re trying to keep a level head, he said.

Analyst Matthew Portillo at Tudor Pickering and Holt said he’ll be paying close attention to news around the Tesla Megapack, the large-scale storage system the company launched in 2019.

Tesla’s solar products remain “challenged” due to cost of installation, but Megapack “continues to be a part of the portfolio that looks extremely interesting to us with utility-scale batteries being paramount to build-out of renewable capacity infrastructure globally,” he said.

Demand for the product remains “very robust given the backlog of orders with earliest deliveries (late 2022) stretches out for almost a year,” he said.

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