Tesla Q3 2022 Investment Note
Tesla reports record quarterly earnings but revenue misses than expectation
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Key Takeaways:
Attitude: The third-quarter of 2022 was still a strong quarter with record revenue, operating profit and free cash flow. Tesla's free cash flow surpassed $3 billion in Q3 and approached $9 billion in the last 12 months. Besides, Tesla achieved an industry-leading operating margin, which reached 17.2% currently when encountering material headwinds. Tesla remains focused on increasing vehicle production as quickly as possible and maintaining strong operating margins.
Guidance: Tesla has ups and downs, even though there could be a downside scenario next year, but Tesla's long-term upward trend hasn't been changed. Specifically, Tesla is looking forward to a record-breaking Q4 because of the excellent demand. Tesla expects a 50% annual growth in production in 2022, while the deliveries may fall under 50% growth. Moreover, Tesla is under review a buyback plan on the order of $5 billion to $10 billion. According to Elon Musk, Tesla has got the most exciting product portfolio, some of which people haven't heard about. The CEO sees a potential path with Tesla's market cap worth more than Apple and Saudi Aramco combined.
Production: Giga Berlin achieved another milestone of 2,000 cars made in a week. Moreover, Tesla is in the final lap for Cybertruck at Giga Texas and making lots of progress in the robotaxi platform design. Tesla plans to deliver the first Tesla Semis trailer trucks to Pepsi in December 2022, 3 years later than initially planned. With respect to batteries, Tesla is gaining rapid traction on the 4680 cells. The production of 4680 cells has tripled in Q3 compared to the previous quarter. Tesla expects to start incorporating with a significant portion of cars in the coming months. Tesla also aims to achieve 1,000-gigawatt hours a year of production capacity in the U.S. vertically integrated.
Challenges: Tesla continues to experience headwinds associated with macroeconomic conditions. The surging raw material cost impacted Tesla's profitability along with ramp inefficiencies from Gigafactory Berlin-Brandenburg, Gigafactory Texas and 4680 cells production. Also, the U.S. Dollar continued to strengthen compared to other major currencies, which added a burden for customers. On cars in transit, Tesla started to experience limits on outbound logistics capacity. This issue is particularly present for ships from Shanghai to Europe and local trucking within U.S. and Europe. The historical operating pattern of a batch building by delivery region leads to concentrations of outbound logistics needs in the final weeks of each quarter.
Q: Do you still expect 50% annualized growth for the foreseeable future? Has the customer demand remained stable?
Elon Musk: We want to sort of focus on a high level on what we think is possible here. To the best of our knowledge, we believe that Tesla will continue to grow deliveries and revenue production at a 50% or greater compound annual growth rate. It might occasionally be a year that is a little less, and then some years would be more. In some of our out-year planning, we see potential annual growth rates that are in excess of 50%.
Q: What updates can you offer on the backlog and recent order intake trends, especially outside of the U.S. and specifically in China?
Elon Musk: China is experiencing a recession of sorts, which is from the property market mostly. And Europe has a recession of sorts driven by energy. From my point of view, the North America is in good health, although the Fed is raising interest rates more than they should, I think they'll eventually realize that and bring them back down again.
Demand is a little higher than it would otherwise be. But as I said, we are extremely confident of the great Q4, and we anticipate continuing to grow our vehicle production, and sales deliveries on average 50% growth a year as far into the future as we can see.
Q: Can you share a little bit more on the production ramp targets for the Tesla Semi that production has started?
Elon Musk: It's a long-range truck with heavy cargo. Just to be clear, 500 miles with the cargo on level ground. We'll be ramping up Semi production through 2023.
At this point, it takes about a year to ramp up production. So, we are tentatively aiming for 50,000 units in 2024 for Tesla Semi in North America. And obviously, we'll expand beyond North America. I don't want to say the exact prices, but they are much more than a passenger vehicle. So, with a few thousand heavy trucks of this nature would be worth several Model Ys.
Q: We keep hearing of the dire energy crisis in Germany this winter. What are Tesla's plans to combat power cuts, and will there be any delays in ramp up in production from Giga Berlin?
Zach Kirkhorn: I think two points to this question. The first is that based on everything that we know, we don't see this as a large risk to our company. Even if production did go down for a period of time, it doesn't have any impact on the long-term of Tesla.
Besides, we put backup plans in place, and we're working through the supply chain as well. Nearly all of our suppliers are prepared as well. So, we'll see how this plays out, but it's not something that we're terribly worried about.
Elon Musk: We have no indication whatsoever that we will have to cut production in Germany.
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Disclaimer
This article is a script from the TSLA Q3 FY22 earnings conference call. In order to facilitate reading, we have made appropriate cuts and revisions. Comments above are made available for informational purposes only. Before investing, please consult a licensed professional. Moomoo Inc. ("moomoo") provides mobile and online technology solutions for securities trading. Moomoo is not an investment adviser or a broker-dealer and it provides neither investment or financial advice nor securities trading services. All contents such as comments and links posted or shared by users of the community are opinions of the respective authors only and do not reflect the opinions, views, or positions of moomoo, its affiliates, or any employees of moomoo or its affiliates. Please consult a qualified investment or tax advisor for your personal financial planning and tax situations. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC). In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services License (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore. In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites https://www.moomoo.com/au. Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.
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minions365 : I sell and let the price down more so i can buy call option later. When market is rallying im going to earn like crazy
Wolowitz : as much as I like Tesla as a company, I think it is over valued. Elon knows it know and that's why they are cutting price in China. hope it goes down to 50 and I will sweep
骨神 Wolowitz: Wait long long
Ong Ah Huat Ah Wolowitz: troll
Silverbat : It is attractive price and impossible falls under 202 ....
Ab Woods : I will add. Opportunity there
romancer :
minions365 : Oh my prediction was right down and up again but when it downed i dare buy! And it quickly went up
Srikanth Reddy :
xALLSTATEx : Elon is just a genius, plain and simple. He makes so much sense, he sometimes reminds me of the Vulcans
from Star Trek (although, that would seem highly illogical 
)....!! If there ever is any pullback from any of his companies, it usually is only a necessary short-term sacrifice, usually done for expansion or enhancements to the overall operation (ie: an investment 
)... You'd do well to remember:
This guy doesn't make BAD investments...!!
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