Profits soared but evaporated hundreds of billions of dollars overnight, what are investors worried about Tesla?

Revenue and net profit both hit record highs, but the stock price plummeted by more than 11%, why is Tesla so worried about the market?

On January 27, US time, Tesla's (TSLA) stock price plunged 11.6% to close at $829.1, the lowest closing price since October 14, 2021, and the market value evaporated by more than $100 billion overnight.

Just the day before, Tesla announced its 2021 results, achieving full-year revenue of $53.8 billion, an increase of 71% year-on-year; net profit of $5.5 billion, an increase of 665% year-on-year; earnings per share of $4.9, an increase of 666% year-on-year. In addition, Tesla also said that in the fourth quarter, it achieved the highest quarterly operating margin among all mass production car companies.

In terms of production, Tesla will produce 930,000 vehicles in 2021 and deliver 936,000 vehicles, almost doubling compared with 2020.

In 2021, when many car companies have cut production due to supply chains and the epidemic, Tesla's delivery capacity and profitability level exceeded Wall Street expectations, but such a bright performance has not been reflected in the stock price.

Some analysts believe that the US stock market is still digesting the interest rate hike signal released by the Federal Reserve, the shock market continues, and the technology stocks fall in the front, and Tesla is also affected by this.

However, in addition, the information revealed on Tesla's earnings call, such as supply chain restrictions and delays in new products, may have caused investors to worry more.

External supply chain issues continue in 2022

Tesla is still not optimistic about the automotive supply chain problem in 2022.

The competitiveness of the ev market will depend on the ability to increase capacity and increase production in the supply chain, while it is expected that the average annual growth rate of vehicle deliveries will reach 50% in the coming years, the earnings report said.

On the conference call, Tesla CEO Elon Musk introduced two new factories that are about to start mass production, one new factory is being selected, Tesla 4680 batteries are about to be on the Model Y, etc., and also said that deliveries in 2022 will easily increase by more than 50%, that is, this year's production will exceed 1.4 million.

But the earnings report also mentioned that "as supply chain becomes a major constraint, factories have been below capacity for several consecutive quarters, and this situation is likely to continue in 2022." ”

In addition, although Tesla can alleviate the chip shortage problem by using alternative chips and quickly rewriting car software, Musk said that in 2022, the biggest limiting factor for Tesla's production capacity is still the chip.

This means that although there are many favorable factors for increasing production capacity, tesla's production capacity ceiling will still be determined by external factors in the coming year.

Not only Tesla, but also many new energy vehicle companies in the United States, the stock price of Xiaopeng Automobile (XPEX) fell more than 12%, Nio (NIO), Ideal Automobile (Li) fell more than 6%, Tesla's competition in the United States Rivian (RIVN) fell 10.5%, and the rival Lucid (LCID) shares fell by more than 14%.

New cars are delayed again, and low-cost models are hopeless

At the end of November 2021, Musk said that he would not only attend the earnings meeting, but also announce Tesla's latest pickup product roadmap. As soon as the news came out, foreign media predicted that the Cyber truck model, which had been postponed many times, would be listed this year, and investors also had high expectations for it.

However, Musk said that the Cyber truck, Semi and Roadster models will not be available this year, and may be launched as early as next year, focusing only on the production of existing production models and solving supply chain problems this year.

In addition, when asked by investors about the production plan of the $25,000 model, Musk not only said that there is no development plan for the $25,000 model at present, but also said that "this question is wrong."

He turned to FSD fully autonomous driving software and said what really matters is when the car goes on autopilot, which will reduce transportation costs by 4-5 times. But because of safety and regulation, FSD has not been a major factor in Tesla's attraction to investors for a long time, said Mark Delaney, an analyst at Goldman Sachs, "vigilant about the speed at which companies are achieving full autonomy." ”

For car companies, only the classic model as a cash cow is not enough to maintain the competitiveness of the company, but also to innovate in the model, cultivate star products, and seize different markets. In addition, the launch of new models also reflects the research and development capabilities of car companies.

There are no new models on the market in 2022, new models have been repeatedly postponed, and the low-priced version of Tesla is also far away, especially the absence of electric pickup trucks, which has become a bottleneck in Tesla's products.

Yahoo Finance said in the report that many investors expect Tesla to rely on low-cost models to seize market share in the hands of traditional car companies, and they are disappointed by this earnings conference call.

Bernstein analyst Toni Sacconaghi said in the report that "Musk's highly anticipated product update is a bit disappointing."

Is the stock price inflated?

Since 2019, Tesla's stock price has soared dozens of times, and last year, due to the Hertz car rental 100,000 Model 3 orders, Tesla's stock price once rose to $1243, and the market value exceeded $1 trillion. Tesla's stock price fell with Musk's stock dump, but after releasing strong delivery data in early January, Tesla's stock price soared to $1200 again, and its market value exceeded the market value of GM, Ford, Toyota, BMW, Honda, Daimler, Volkswagen and other traditional giants combined.

"Inflated stock price" is the evaluation of Tesla by many investors, and many analysts call it a "stock that must be avoided", on the one hand, because the automobile manufacturing industry needs a lot of capital investment for a long time, and on the other hand, because most stocks in the automotive industry have a very low price-earnings ratio.

Even Musk has repeatedly said in interviews or on Twitter that Tesla's stock price is too high.

However, according to the Wall Street Journal, although Tesla's stock price plummeted, many Wall Street analysts raised Tesla's target price.

Deutsche Bank analyst Emmanuel Rosner said maintaining Tesla stock's buy rating and $1200 target price, "We remain convinced that Tesla is impressive in terms of battery technology, manufacturing capabilities, and especially cost control, which will help accelerate the world's transition to electric vehicles and expand Tesla's leading position in electric vehicles." ”

Goldman Sachs analyst Mark Delaney gave Tesla a buy rating and a $1,200 price target, stressing that its car margin is 29.2 percent and expects sales to grow by more than 50 percent this year, saying "Tesla remains one of the fastest-growing companies in the automotive ecosystem."