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In the morning of April 21, Beijing time, Tesla (TSLA. US) reported its first quarter 2022 earnings report, with key performance indicators delivering satisfactory answers and exceeding analyst consensus expectations.
As always, Tesla CEO Musk did not forget to reassure investors at the performance meeting: "Despite missing a few weeks, we are still expected to see production comparable to the first quarter in the Shanghai factory, and the numbers in the third and fourth quarters will be better." In addition, Musk did not forget to leave the harsh words, that is, to emphasize that in 2030 or before to achieve the annual sales target of 20 million vehicles - equivalent to 6 times toyota's 2030 small target.
Boosted by the bright earnings report, Tesla's stock price rose 5.57% after hours in the US stock market at $1031.60, recovering all the losses during normal trading hours.
Totally exceeded expectations!
The latest financial report data shows that Tesla's total Q1 revenue was $18.756 billion, an increase of 81% from the first quarter of last year, higher than the $17.92 billion generally expected by analysts, and the sixth consecutive quarter of total revenue exceeded the $10 billion mark. Net profit under the GAAP standard for the first quarter was $3.318 billion, up 658% year-over-year and generally expected to be $2,156 million; Non-GAAP net income was $3.736 billion, up 255% year-over-year, and EPS was $3.22, well above the $2.26 commonly expected by analysts.
Regarding the 2022 production forecast, Tesla CEO Elon Musk said that Tesla should be able to produce 1.5 million cars in 2022, and Musk also said that Tesla is expected to achieve 60% car delivery growth this year and is confident of a 50% annual delivery increase in the next few years. Morgan Stanley's analytics team had previously predicted that Tesla would deliver 1.46 million vehicles in 2022, up 56 percent from 2021.
Regarding the production volume expectations of the Shanghai factory, at the end of March this year, Tesla's Shanghai Gigafactory suspended production due to the new crown epidemic, and officially resumed work and production on Tuesday, Musk expects that tesla's Shanghai factory's second quarter car production will be similar to the first quarter, but in the third and fourth quarters will achieve high production, which also strengthens the market's confidence in Tesla's production capacity.
According to the segmentation of the business, the automobile business is still the absolute main force driving Tesla's revenue surge, and it can be seen from the performance of the past few years that the automobile business accounts for a huge proportion of revenue. Q1 Tesla's automotive business (sales + leasing + regulatory credit) revenue reached $16.86 billion, an increase of 87% year-on-year, accounting for nearly 90% of total revenue, the gross margin of this business jumped to a record 32.9%. Among the automotive businesses, car sales accounted for the largest proportion, reaching $15.514 billion in the quarter.
Since the outbreak of COVID-19, Tesla seems to have been an "outsider" to the electric car industry. In the few quarters when Tesla competitors announced production cuts or even shutdowns in the chaos of the global supply chain, Tesla's deliveries and total revenue hit new records. In particular, in terms of deliveries, earlier this month Tesla announced that it delivered 310,048 vehicles in Q1, setting a new record for the highest quarterly deliveries set in the fourth quarter of last year, up 67.5% year-on-year.
Against the backdrop of supply chain problems in the auto industry, it is not easy for Tesla's total revenue and net profit to exceed analysts' expectations this quarter. Overall, the first performance of the global electric vehicle leader Tesla in 2022 is indeed very good, and the car-making overlord has once again surprised the world with strong hard power, and is even expected to boost the rally and investment sentiment of the NASDAQ and the entire US stock market.
The performance has once again blossomed in an all-round way, and the gross profit margin is "dazzling" for many car companies
Tesla's total revenue in the first quarter hit a record high, reaching $18.756 billion, exceeding analysts' general expectations and up 81% year-on-year from the first quarter of last year. So far, Tesla has exceeded the $10 billion mark for six consecutive quarters of revenue, and three consecutive quarters of revenue have reached a record high in a single quarter.
From the cost of sales ratio chart, it can be seen that Tesla has made sufficient efforts in the cost side in recent years, insisting on spending less to create the greatest value, and trying to control the indicator in the range of 70%-80% in recent years. Tesla's cost-of-sales ratio in the first quarter was about 70 percent, down from the previous quarter and the same period last year, and a new low in recent years. In the context of the soaring raw materials in the first quarter and the obstruction of the supply chain, Tesla handed over a satisfactory answer sheet to the market in terms of controlling costs.
After looking at Tesla's cost of sales ratio, let's look at the gross profit margin, which is also an important data for Tesla's financial report to amaze the market. Tesla's gross margin under the GAAP standard reached 29.1%, a new high in nearly 10 years, nearly 8 percentage points higher than the first quarter of last year, higher than the 25.8% generally expected by analysts and 24.7% in the fourth quarter of last year.
Gross profit margin is one of the most intuitive data reflecting the profitability of enterprises, and analysts generally believe that Tesla is still the most profitable car company among the mainstream electric vehicle companies. In contrast, traditional car-making giants Volkswagen and Daimler Benz gross margins have been hovering around 20% for many years, while Ford (F.US) and General Motors (GM. US) hovered around 15 percent, while Lucid (LCID.US) and Rivian (RIVN. US) and other car-making upstarts are still stuck in the negative range.
In 2022, the price increase of electric vehicle batteries is a hot topic in the investment community, and Musk has also publicly stated that Tesla is facing inflationary pressures, mainly raw materials and logistics, but Tesla's strong pricing power allows the company to transfer cost pressure to consumers, helping to achieve further increases in gross profit margins. After the car-making upstart Rivian raised the price, the market did not give him a good look, and its customers collectively strongly opposed the price increase, and the stock price plummeted, after which Rivian had to withdraw the price increase plan.
Operating margin is often one of the important indicators reflecting the ability of enterprises to operate, under the GAAP standard, Tesla's Q1 operating margin reached a record high of 19.2%, compared with the same period last year, up 1349 basis points year-on-year
Some people believe that Tesla's operating profit margin has surpassed some traditional car companies, proving that electric vehicles can have stronger profitability than fuel vehicles.
Tesla's net profit under the GAAP standard for the first quarter was $3.318 billion, an increase of 658% year-on-year. Driven by strong growth in net profit, Tesla's Q1 net profit margin reached a new high, reaching 17.7%. The indicator has repeatedly reached new highs since achieving "landing" (i.e. above 0), which continues to surprise investors.
This data is not easy for Tesla, a car manufacturer that needs to spend a lot of money, the automobile manufacturing industry belongs to the ranks of heavy assets, and the cost of investment before production is often very high, which is why most of the car-making upstarts are difficult to achieve profits in the past few years, or even nearly 10 years.
In terms of cash flow, Tesla's net cash flow from operating activities in Q1 was $3.995 billion, an increase of 143% year-on-year, accounting for 21% of total revenue, although this proportion is not as high as the highest level in history, but it is still near the high. In addition, Q1 free cash flow reached $2.228 billion, up 660% year-over-year and down 19.7% sequentially.
For a heavy asset car company like Tesla, the operating cash flow of 20% + is a very good level. The higher this proportion, the more funds companies have for R&D and other expenditures, thereby continuously improving their competitiveness.
Without fear of supply chain problems, production capacity is expected to exceed the 2 million mark
As the market demand for electric vehicles continues to be strong, Tesla is increasing its horsepower to expand production capacity, Musk said at the performance meeting: "The problem we face is not limited demand, but limited production capacity." "Tesla's high-efficiency management of the supply chain, coupled with the unpredictable purchase of upstream raw materials in large quantities in advance, superimposed on its own strong pricing power and brand value, Tesla has to a certain extent controlled the negative impact of the supply chain on production capacity to a minimum."
Combined with the market's general expectations for Tesla's production capacity, and Tesla's capacity allocation announced in the earnings report, Tesla's production capacity is expected to exceed the 2 million mark this year.
In late March, Tesla's first manufacturing base in Europe, the Gigafactory in Berlin, Germany, was officially put into operation. The plant is expected to have an annual production capacity of 500,000 units, with production models of the Model Y and some Model 3 models. At present, the production capacity is still in the climbing stage, Tesla's production target at the end of April is 1,000 vehicles / week, that is, 50,000 vehicles / year, according to media reports, these models may be Model Y models.
Less than a month later, Tesla's new manufacturing facility in Austin, Texas, officially opened. The Texas plant opened in the first quarter of 2022, delivered the first Model Y in April, and this year's capacity will be mainly used to produce the Model Y, with a target annual capacity target of 500,000 units, and production of Cyberteruck is scheduled to begin in 2023. Many analysts believe that the new Austin plant and the Berlin factory are expected to double Tesla's annual production together.
Tesla's Fremont Gigafactory has a production capacity of 600,000/year, and Tesla expects the Model S/X to allocate about 100,000 units and the Model 3/Y to about 500,000 units. Tesla's Shanghai Gigafactory is planned to have a production capacity of 500,000 vehicles, but some analysts predict that the production plan will return to normal, and according to the data currently disclosed, the Shanghai Gigafactory is expected to sprint to millions of production capacity in 2022.
What is the concept of 2 million production capacity? How are the production capacity plans of other car companies? Honda (HMC. US) plans to launch 30 electric vehicles worldwide by 2030, and plans to have an annual production capacity of more than 2 million electric vehicles. Ford plans to produce about 600,000 electric vehicles a year over the next two years, and by 2030, half of its sales will come from battery-powered cars. GM plans to have a total capacity of more than 1 million electric vehicles in North America by the end of 2025.
Electric cars are still quality tracks
Whether it is Wall Street or personal investment, the most important reason to be optimistic about Tesla is undoubtedly optimistic about the high-prosperity track of electric vehicles, and Tesla is the undisputed leader of the track. Especially under the global trend of decarbonization and intelligence, the growth story of the electric vehicle industry may have just begun.
Morgan Stanley pointed out in a forecast report that as the US and global governments increase policy support for the electric vehicle industry, the proportion of electric vehicle sales will reach 26% in 2030 and more than 70% in 2040. Statistics show that this data is about 9% in 2021.
The global electric vehicle market size forecast data released by mordor Intelligence in 2022 shows that by 2026, the electric vehicle market size will reach $1,046.8 billion. From the 2020 statistics, the compound annual growth rate (CAGR) of this market size is as high as a staggering 26%.
Tesla believers may once again usher in a carnival
Streaming giant Netflix (NFLX. US) after the latest performance thunderstorm, yesterday the NASDAQ was directly collapsed by Netflix, and even with the collapse of all the technology stocks in the US stock market, Tesla also could not escape this fate, falling by 4.96% during the trading period. However, after Tesla's Q1 performance, Tesla rose nearly 7% after hours, and also brought up a wave of electric vehicle stocks. Tesla closed up 5.57% after hours, fully recovering the losses in trading hours.
So far this year, although Tesla's stock price is still down 7.3%, it is far ahead of other electric vehicle peers, such as car-making upstart Rivian, which has fallen 65% since the beginning of 2022, Lucid stock, which has fallen nearly 50%, and traditional car company General Motors, which has also fallen by 28%.
However, after Tesla's latest financial report came out, the bullish force of the stock began to gain the upper hand, which is also reminiscent of the two waves of Tesla stock price explosion period opened in October 2020 and August 2021, Long Call is endless, and the time period is also shortly after the performance is announced, and finally Tesla's stock price staged a textbook main wave. Long Call usually refers to buying a call option, and in a trading context usually refers to a strong call.
Before the release of Tesla's latest results, many Tesla stocks or Musk's iron fans are still optimistic that Tesla's stock price is expected to be violently stretched again, reproducing the domineering main rising wave of the year. It is worth noting that many large Wall Street banks have begun to sing long before the earnings report is released, Credit Suisse raised the Tesla target price from $1025 to $1125, and maintained the "outperform the market" rating of the stock, and Bank of America maintained Tesla's target price of $1100. Most of Tesla's "wooden sisters" expressed firm optimism about Tesla, and she set Tesla's 2026 price target at $4600, after previously giving Tesla a target price of $3,000 in 2025.
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