Tesla Q4 2021 Earnings Preview

Big Earnings Week

The earnings season picks up in the US, with more heavy names reporting this week apart from Tesla. Microsoft, Intel and Apple are some of them, while airplane make Boeing, telecoms giant AT&T and fast food behemoth McDonalds also release their results over the following days.

These come in a backdrop of foul sentiment in Wall Street, largely due to aggressive expectations around the Fed's tightening path, which hands down its monetary policy decision on Wednesday January 26th.

Q4 Forecasts

Tesla reports financial results for the fourth quarter of 2021, on Wednesday January 26, after markets close.

The prior quarterly earnings had beat estimates and the company had registered record net income of $2.1 billion (non-GAAP), operating profit of $2 billion and gross profit of $3.66 billion. [1]

Furthermore, the operating margin of 14.6% had exceeded the firm's medium-term guidance, while its Automotive gross margins had improved to 30.5%.

In a backdrop of rising inflation and wages, margins are expected to be in the spotlight not just for Tesla, but for most firms during the current earnings season.

As per Investing.com earnings calendar, Tesla is forecasted to report Q4 Revenue of 16.88 billion, compared to $13.76 billion in the prior quarter and$10.74 billion a year ago. [2]

Earnings are projected at $2.25/share in Q4, versus $1.86 in the prior quarter and $0.8 in Q4 2020.

Deliveries & Competition

Tesla reported record deliveries of 308,600 vehicles for the fourth quarter – up nearly 30% from the third quarter's 242,300 units. [3]

Model 3 and Model Y had the largest portion, while the Models X and S accounted for 11,750 of the firm's Q4 deliveries.

For the Full Year of 2021, Tesla reported 936,172, compared to 499,500 in the prior year.

These are definitely impressive results, especially given the semiconductor shortages that have plagued the auto industry after the pandemic hit.

Tesla is the king of the Electric Vehicle (EV) market, but has been facing increasing competition from US and foreign companies, not only from electric startups, but also from traditional automakers.

Chinese rivals, Nio and Xpeng also had record fourth quarter, having delivered 25,034 and 41,751 vehicles, while having unveiled new models recently. [4], [5]

Lucid recently began delivering its first vehicles and seems to have made quite a splash on the industry, getting solid reviews and the 2022 MotorTrend Car of the Year award for its Lucid Air model. As of the November 15 2021 update, the firm had 17,000 reservations. [6]

Motortrend's Truck of the Year went to an all-electric model as well – Rivian's Rivian's R1T, which began deliveries in autumn of 2021.

Ford is entering the arena as well, with the F-150 Lightning, the all-electric version of the iconic F-150 pickup truck. Its CEO recently announced the doubling of production to 150,000 units annually due to increased demand.

Tesla had unveiled its EV truck - the Cybertruck - in 2019, but production has been delayed multiple times. During October's Annual Meeting, Mr Musk had said that stock production was expected in 2022 and volume production is the following year. [7]

Berlin Factory

Apart from update on the Cybertruck, we will also be looking for any news around Tesla's second factory outside the United States, which is located in Berlin, Germany. The company intends to manufacture the model Y there, and was expecting to get full approval before the end of the past year.

Full license has not been granted, although some vehicles have appeared on site. As per Elecktrek, Tesla has obtained special approval to produce some Model Ys for testing. [8]

Mr Elon Musk confirmed in a twitter reply last week, that he will be visiting the Giga Berlin in mid-February [9]. Back in October the company had hosted a Country Fair on the site, probably hoping to ramp up support from locals, amidst objections from environmental groups which have delayed the licensing process.

Stock Movement

TSLA.us comes from a nearly 50% rise during 2021 and a profitable third quarter, which led to November's all-time high (1,244.70). After that however, it runs two negative months, with losses in excess of 10% so far this year.

Last week was very bad for the US market, amidst aggressive tightening expectations from the Federal Reserve and risk aversion, generated partly by Netlix's poor subscriber growth guidance.

TSLA.us is in correction territory and if broader market sentiment does not improve, it is in precarious position. From a technical prospective, the first key support is provided by the EMA200 (at around 852.00). Above that, it has the ability to push back, but a breach could open the door for larger decline towards and beyond October's lows (763.12)


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 24 Jan 2022 https://tesla-cdn.thron.com/static/TWPKBV_TSLA_Q3_2021_Quarterly_Update_SI1AKE.pdf

2

Retrieved 24 Jan 2022 https://www.investing.com/equities/tesla-motors-earnings

3

Retrieved 24 Jan 2022 https://ir.tesla.com/press-release/tesla-q4-2021-vehicle-production-deliveries

4

Retrieved 24 Jan 2022 https://ir.nio.com/news-events/news-releases/news-release-details/nio-inc-provides-december-fourth-quarter-and-full-0

5

Retrieved 24 Jan 2022 https://ir.nio.com/news-events/news-releases/news-release-details/nio-inc-provides-december-fourth-quarter-and-full-0

6

Retrieved 24 Jan 2022 https://ir.lucidmotors.com/node/7406

7

Retrieved 24 Jan 2022 https://www.tesla.com/2021shareholdermeeting

8

Retrieved 24 Jan 2022 https://electrek.co/2022/01/10/tesla-receives-greenlight-build-2000-model-y-bodies-gigafactory-berlin-ahead-final-approval/

9

Retrieved 20 May 2022 https://twitter.com/i/web/status/1483213212556443658

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