Tesla Sinks After Revenue Miss, Analysts Increasingly More Cautious

By Senad Karaahmetovic

Shares of Tesla (NASDAQ:) are down about 6% in pre-market Thursday after the electric vehicle (EV) giant reported mixed Q3 results.

The company Q3 EPS of $1.05, higher than the analyst estimate of $1.03. Revenue rose 56% to $21.45 billion, falling short of the average analyst estimate of $22.5 billion.

Tesla blamed mixed results on the FX headwinds, higher raw materials, and logistics costs, as well as struggles in getting Berlin and Texas up to speed. As a result, the company’s CFO Zach Kirkhorn said on the earnings call that Tesla will miss its 2022 target of increasing vehicle deliveries by 50%.

Still, CEO Elon Musk remained optimistic about the outlook for the EV titan.

“We are going pedal to the metal come rain or shine. So we are not reducing our production in any meaningful way, recession or no recession,” he said on the earnings call.

Musk also said the board discussed the idea of introducing stock buybacks in 2023, mentioning $5 billion-10 billion as a potential figure for the next year. Speaking about his pending acquisition of Twitter (NYSE:), Musk argued that “the long-term potential for Twitter in my view is an order of magnitude greater than its current value.”

Following the mixed Q3 earnings report, several Wall Street analysts lowered their price targets on Tesla stock. Bernstein analysts, who rate Tesla as Underperform, stated that some cracks might be emerging. They were also not impressed by Musk’s appearance on the earnings call, who reportedly gave “curt and almost dismissive” answers to questions.

“TSLA’s Q3 results were disappointing, with revenues and auto gross margins excredits below consensus. The company stated that while it still expected production to grow 50%, unit deliveries would lag, which it attributed to more balanced deliveries. We are lowering our FY 22 unit forecast slightly, and lower our FY 22 and FY 23 EPS,” the analysts said in a client note.

Goldman Sachs analysts reiterated a Buy rating on Tesla as the company remains “well positioned for long-term top and bottom-line growth.” Still, they admit “the weaker 3Q results for ASPs and gross margin coupled with the ongoing macroeconomic risks will likely remain concerns for the market at least in the near-term.”

Morgan Stanley analysts are much more upbeat, saying Tesla delivered “a very strong quarter.”

“We wish FY23 consensus would allow more room for macro uncertainty,” they wrote in a client note.

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