Tesla Stock Earnings and Forecast: TSLA slides 7.5% on revenue miss, lower margins
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UNLOCK OFFER- Tesla missed revenue expectations for the first quarter.
- TSLA falls 6.5% in Thursday premarket.
- Margins dropped due to Q1 price cuts.
- Further price cuts are also being considered.
Tesla (TSLA) stock dropped afterhours on Wednesday and in Thursday's premarket after the electric automaker missed revenue expectations by $60 million and CEO Elon Musk said he was comfortable with more price cuts for the electric automaker over the rest of 2023. Adjusted EPS of $0.85 still came in line, but that was not enought to settle the market. The stock is currently trading down 7.5% at $167.
Revenue came in at $23.3 billion, up 24% YoY, in the first quarter.
Tesla stock news: EV price war looms
Tesla's extensive price cuts across its suite of vehicles in the first quarter pushed automotive gross margin down to 19%. Back during the company's Q4 earnings call in January, CFO Zachary Kirkhorn and Musk had agreed that a 20% gross margin was the forecast for 2023. This was already much lower than the year ago figure of 29%, so failure to stick to 20% was judged harshly by the market.
“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” Musk said on Wednesday evening's earnings call. Operating margin fell to 11.4% in the quarter, and Musk made clear that further price cuts are a possibility. In the previous quarter Tesla held the operating margin to 16%.
Other EV automakers saw their shares decline as well with the realizatioin that Musk's price cuts are not a temporary one-off strategy to juke demand. Both Ford (F) and General Motors (GM) fell marginally afterhours, while Chinese EV makers Nio (NIO) and XPeng (XPEV) fell 7% and 11%, respectively. For its part, Nio executives said they would not be drawn into a price war with Tesla, which has cut the price of its Model 3 by more than a quarter on average.
Tesla still produced $2.5 billion in GAAP profit and $2.9 billion on an adjusted basis. Free cash flow of $441 million, however, dropped 80% YoY. Besides the price cuts, Tesla executives also cited higher material, commodity and warranty costs in the quarter that dug into operating margins. Capex rose from the fourth quarter as Tesla continued to ramp up its factories in Texas and Austin, as well as
The much smaller solar panel business that was acquired from Solar City saw a 40% increase in deployment YoY at 67 MW in the first quarter. The storage business also grew a staggering 360% YoY to 3,889 MWh.
Tesla stock forecast
The weekly chart below is necessary to see where Tesla stock is headed. The premarket on Thursday has seen TSLA trade right down to the $167.50 level. That level worked as resistance in August and November of 2020 and then as support in the first half of 2021. It has also worked as support this year in both March and January. Below here lies further support at $154. It would be unsurprising to see TSLA stock move down to either support over the next month as the stock advanced 100% through February of this year before pulling back. The current consolidation phase will be over once TSLA breaks back above $214.
- Tesla missed revenue expectations for the first quarter.
- TSLA falls 6.5% in Thursday premarket.
- Margins dropped due to Q1 price cuts.
- Further price cuts are also being considered.
Tesla (TSLA) stock dropped afterhours on Wednesday and in Thursday's premarket after the electric automaker missed revenue expectations by $60 million and CEO Elon Musk said he was comfortable with more price cuts for the electric automaker over the rest of 2023. Adjusted EPS of $0.85 still came in line, but that was not enought to settle the market. The stock is currently trading down 7.5% at $167.
Revenue came in at $23.3 billion, up 24% YoY, in the first quarter.
Tesla stock news: EV price war looms
Tesla's extensive price cuts across its suite of vehicles in the first quarter pushed automotive gross margin down to 19%. Back during the company's Q4 earnings call in January, CFO Zachary Kirkhorn and Musk had agreed that a 20% gross margin was the forecast for 2023. This was already much lower than the year ago figure of 29%, so failure to stick to 20% was judged harshly by the market.
“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” Musk said on Wednesday evening's earnings call. Operating margin fell to 11.4% in the quarter, and Musk made clear that further price cuts are a possibility. In the previous quarter Tesla held the operating margin to 16%.
Other EV automakers saw their shares decline as well with the realizatioin that Musk's price cuts are not a temporary one-off strategy to juke demand. Both Ford (F) and General Motors (GM) fell marginally afterhours, while Chinese EV makers Nio (NIO) and XPeng (XPEV) fell 7% and 11%, respectively. For its part, Nio executives said they would not be drawn into a price war with Tesla, which has cut the price of its Model 3 by more than a quarter on average.
Tesla still produced $2.5 billion in GAAP profit and $2.9 billion on an adjusted basis. Free cash flow of $441 million, however, dropped 80% YoY. Besides the price cuts, Tesla executives also cited higher material, commodity and warranty costs in the quarter that dug into operating margins. Capex rose from the fourth quarter as Tesla continued to ramp up its factories in Texas and Austin, as well as
The much smaller solar panel business that was acquired from Solar City saw a 40% increase in deployment YoY at 67 MW in the first quarter. The storage business also grew a staggering 360% YoY to 3,889 MWh.
Tesla stock forecast
The weekly chart below is necessary to see where Tesla stock is headed. The premarket on Thursday has seen TSLA trade right down to the $167.50 level. That level worked as resistance in August and November of 2020 and then as support in the first half of 2021. It has also worked as support this year in both March and January. Below here lies further support at $154. It would be unsurprising to see TSLA stock move down to either support over the next month as the stock advanced 100% through February of this year before pulling back. The current consolidation phase will be over once TSLA breaks back above $214.
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