Some silly American analysts were not happy with Tesla’s revenues of $US21.45 billion for the three months to September, pointing out that they were lighter than the $US21.96 billion forecast by themselves.
They claim it was a sign of weakening demand and ignored the disruption in Shanghai early on in the quarter from Covid restrictions.
The same analysts failed to mention revenues for the three months to September were up 56% on a year ago, while revenues from automotive operations (Tesla’s core business) were up 55% to $US18.7 billion.
And the most essential thing for a company is whether its profitable – and yes I know all the guff about growth companies – but the tech giants that dominate business these days are all highly profitable and so is Tesla, reporting net income of $US3.29 billion for the quarter, more than double the year ago figure of $US1.62 billion.
The company warned about a bottleneck in transportation capacity for delivering new cars in the final weeks of the quarter, and said it was “transitioning to a smoother delivery pace.” That was a problem in Shanghai especially.
Deliveries to Australia have not been smoothed – 12,000 vehicles arrived in this country in August and September as deliveries were bunched.
“There weren’t enough boats, there weren’t enough trains there weren’t enough car carriers,” Elon Musk said on a conference call to discuss the results, adding that the firm expects to sell every car it makes.
“I can’t emphasize enough we have excellent demand for Q4 and we expect to sell every car that we make for as far into the future as we can see,” Musk told a briefing in adding to that ambition.
“The factories are running at full speed and we’re delivering every car we make, and keeping operating margins strong.”
Tesla said its automotive gross margins held steady at 27.9%, where it was in the second quarter of 2022.
The company also said it was likely to do a “meaningful buyback” next year, he added, potentially between $US5 billion and $US10 billion pending board approval.
He also said, optimistically, “I’m of the opinion that we can far exceed Apple’s current market cap. In fact I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. That doesn’t mean it will happen or will be easy.”
Shareholders had lodged questions ahead of the results conference and had asked Tesla executives to address concerns about macroeconomic issues in China and Europe.
“China is experiencing a recession of sorts” mostly in the property markets, Musk said, “and Europe has a recession of sorts driven by energy.” He added, “North America’s in pretty good health, although the Fed is raising interest rates more than they should, but I think they’ll eventually realize that and bring them down again.”
Tesla reiterated that deliveries of its Semi electric heavy-duty truck will begin this December, and confirmed that it is producing the Semi at its plant in Nevada.
The product was first announced at the end of 2017. It offered no firm timeline for the start of production of its Cybertruck pickup, saying only that it would be produced in Texas after the ramp-up of Model Y production there.
The company previously reported that deliveries (its version of sales) for the quarter ending September 30 reached 343,000 and vehicle production reached 365,000.
Rather worry about “light” revenue data, analysts would be better off taking Musk to task for his silly, distracting $US44 billion bid for Twitter which he has to complete.
It is the fears that Twitter bid will force Musk to pay less attention to Tesla and its ground-breaking EVs and batteries that has seen the shares lose hundreds of billions of dollars in value.
Tesla shares have dropped 40% this year and most of that can be linked to the Twitter diversion, while the rest can be pit down to the problems in Shanghai and President Xi Jinping’s silly Covid zero policy that crunched activity in China, especially in Shanghai mid-year and saw Tesla, BYD and other big Chinese car makers and their suppliers forced to shut factories or cut output.
