Even analysts who are not optimistic about Tesla have given credit to the company's performance in the first quarter.
On Thursday (April 21), Tesla (TSLA) announced its first quarter 2022 financial report, with revenue and profit exceeding expectations. Tesla's total revenue for the quarter was $18.8 billion, up 81 percent year-over-year, the highest level ever, higher than Wall Street's estimate of $18 billion, earnings per share at a record $3.22, higher than expected at $2.26; operating profit also reached a record $3.6 billion, higher than expected $2.6 billion.
Tesla rose 12 percent at one point during intraday on Thursday, closing gains narrowed to 3.2 percent at $1,008.78 as the broader market fell.
At the same time as releasing the first quarter earnings report, Tesla also announced the next performance guidance. Musk said on the conference call: "Car production in 2022 will increase by 50% compared to 2021, and we are still full of confidence in this, and it is even possible to achieve 60% growth." ”
At a time when Tesla's Shanghai factory was closed at the end of March due to the epidemic and the situation remained unstable after resuming work, Musk's statement may help appease investors who are worried about production. According to musk's 50%-60% midpoint of the production increase, Tesla will deliver about 1.45 million vehicles in 2022, close to Wall Street's expectations.
1
Wall Street shouted surprises, and bearers also raised their target prices
Gross margins in Tesla's automotive business reached a record 32.9 percent in the first quarter, and analysts had expected inflationary pressures to cause the business's profits to decline from around 29 percent in the fourth quarter of last year.
Pierre Ferragu, an analyst at New Street Research, said: "It's amazing that while inflation has led to higher raw material prices, the gross margin of Tesla's automotive business has still risen. Firaju rated Tesla "Buy" with a price target of $1580.
Lower costs and higher average selling prices for vehicles were the main reasons for the unexpected increase in gross margin in the automotive business.
Tesla's manufacturing cost per vehicle fell in the first quarter, in part because the company used long-term contracts to buy batteries and raw materials that could delay the impact of soaring spot prices, and another reason was that about half of the cars shipped in the first quarter were equipped with iron phosphate batteries that did not contain the higher cost of nickel or cobalt.
In addition, the average price of Tesla Model 3 and Model Y has increased by more than 20% over the past year. According to Bernstein, some Model Ys were up 30 percent as of March.
Wedbush analyst Dan Ives also rated Tesla "buy, with a price target of $1400. Ives said that in the context of the cruel supply chain, Tesla has handed over a beautiful report card against the trend.
Ark Invest, owned by Cathy Wood, continues to be bullish on Tesla, arguing that the company's stock price will reach $4,600 in 2026.
Even analysts who are not bullish on Tesla have applauded the company's performance, and some of them have raised their price targets.
Cowen analyst Jeffrey Osborne, who also performed very well on Tesla's business, said: "Despite the supply chain facing headwinds, Tesla still says production can grow by at least 50% this year." Osborne is not a Tesla bull, he gave a rating of "hold" with a target price of $790, and he believes that Tesla's gross profit margin may have peaked, so the stock is less attractive from the current valuation level.
Ryan Brinkman, an analyst at J.P. Morgan who gave a "sell" rating, praised Tesla's strong performance, but he believes one of the reasons is that regulatory points sales revenue exceeded expectations. This portion of Tesla's additional revenue in the first quarter was $679 million, up from $312 million expected by Wall Street. But Brinkman raised his price target from $330 to $395.
Another analyst who gave the "sell" rating was Citigroup's Itay Michaeli, who, like Osborne, praised Tesla's first-quarter results and management's ability to execute, but remained cautious about the stock due to valuation issues. But he also raised his price target from $313 to $375.
2
Many "side jobs" may distract Musk, will Tesla become the next Netflix?
In addition to its core auto business, Tesla is also working on a range of other businesses backed by the money it brings in from the auto business, and the company is becoming a "king of side businesses."
Bullish Teslars think it's a good thing to have other businesses, but bearers are skeptical. Barron's magazine believes that as long as Tesla's core business remains healthy, the impact of these two views on the stock price is not so great, but if Musk invests more money and time in the "side business", it is not accurate.
Musk recently announced plans to build a new car specifically for self-driving technology, the Robotaxi robot taxi, which seems to run counter to Tesla's current self-driving plans, as the company has been focusing on fully autonomous driving capabilities through hardware from existing vehicle configurations. In addition, Musk is also developing the Optimus humanoid robot project.
Musk even said on Tesla's fourth-quarter earnings call last year: "People who are insightful or good listeners will understand that Optimus will ultimately be worth more than the automotive business and the self-driving business." ”
But some analysts believe that these "side hustles" have caused Musk to deviate from what he should have focused on, and it is a mistake to focus on the robot taxi when Tesla should develop a low-cost new model.
Bernstein analyst Toni Sacconagi said Tesla's efforts to drive 50 percent annual sales growth on the Model 3 and Model Y, two lower-priced models, gave competitors a chance to catch up with Tesla if it failed to launch a new, lower-priced electric car sooner.
Ford, GM and Volkswagen are all vying for dominance in the U.S. electric vehicle market, where Tesla currently has a market share of more than 80 percent. But Tesla's market share in Europe and China is much lower than in the U.S. market for two reasons: First, there are more electric vehicle models for sale in Europe and China; second, Tesla's current production capacity is not enough, for example, a Model Y may take nine months to deliver.
Other companies are struggling to catch up, with Ford and GM planning to sell millions of electric vehicles a year until the middle of the current decade, and Volkswagen's electric vehicle sales are also expanding, with Volkswagen selling about 100,000 in the first quarter of this year worldwide and Tesla 310,000.
The share price of streaming media giant NFLX has recently plummeted due to increased competition and user churn. After Paramount Universal, Disney, Hulu and Amazon entered the streaming market, Netflix's growth began to slow. Some analysts believe that the fierce competition has sounded a wake-up call for Tesla, because the competition in tesla's market is also very fierce.
GLJ Research analyst Gordon Johnson believes Tesla and Netflix have similarities. He believes that as growth slows, Tesla's valuation will fall sharply. Johnson has been skeptical of Tesla, giving him a price target of just $67.
Johnson wrote in a research report on Thursday: "Like Netflix, Tesla has also passed the stage of high-speed growth. He believes that due to supply chain problems that will limit Tesla's production, the company's revenue will be flat or declining in the second quarter of this year.
Pedro Palandrani, head of research at Global X ETFs, said: "As the penetration of electric vehicles in new car sales slows, all car companies will have to compete for market share, and not every company will win. He advises investors to hedge against the risks Tesla may face from Netflix and that it is safer to hold a basket of electric vehicle stocks than to hold a basket of electric vehicle stocks.
Wen | Contributor to the Chinese edition of Barron's Magazine Guo Liqun
Edit | Peng Ren
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