Tesla ( TSLA ) reported mixed fourth-quarter results on Wednesday, beating earnings estimates while missing revenue projections. Tesla stock continued to soar in overnight trading as CEO Elon Musk was bullish on 2023.
After a terrible 2022, in which Tesla stock took a sharp dive in December, shares have fallen again to start 2023. However, Tesla has rebounded since its big price cuts were announced on Jan. 6 for vehicles in China and has continued to rise since announcing price cuts in the US and Europe a week later.
Tesla stock rose more than 5% after hours. Shares rose 0.4% to 144.47 in Wednesday trading, reversing higher.
Calculates: Analysts had forecast earnings to rise 33% to $1.13 a share in the fourth quarter. At the end of December 2022, analysts were predicting EPS of $1.25. Analysts had set a revenue target of 39% growth to $24.67 billion.
Profits: Tesla’s EPS rose 40% to $1.19, while revenue rose 37% to $24.32 billion in the fourth quarter.
For the full year, revenue rose 51% to $81.46 billion, missing estimates. Earnings rose 80% to $4.07 a share, beating Wall Street expectations.
Tesla had already announced that its deliveries reached a record 405,278 in the fourth quarter. That missed lower forecasts despite aggressive year-end stimulus. Vehicle deliveries were up 31% from a year earlier and nearly 18% from the third quarter’s 343,830. Deliveries also rose 40% to 1,313,851 in 2022. This was well below the company’s 50% growth target.
Analysts had expected Tesla deliveries in the fourth quarter to be around 420,000, down significantly from higher estimates. Tesla’s third-quarter deliveries were also down.
Tesla production reached 439,701 in the fourth quarter, outpacing deliveries by more than 34,000. In the third quarter, production outpaced sales by just over 22,000. Tesla production reached 439,701 in the fourth quarter, outpacing deliveries by more than 34,000. In the third quarter, production outpaced sales by just over 22,000.
With production ramping up at the company’s factories in Berlin and Austin, Texas, Tesla’s total production capacity is now well over 450,000 per quarter.
Tesla unit sales totaled 1,313,851 for 2022, up 40% from 2021, but below the 50% target. The Model 3 sedan and Model Y crossover accounted for the vast majority of sales. The top-of-the-range Model S and X vehicles accounted for the rest.
Meanwhile, the Cybertruck is expected to arrive in 2023, which will be Tesla’s first new model since the Model Y launched in early 2020. The oft-delayed truck will go into “early production” in the middle of the year , according to CEO Elon Musk. Other reports say the Cybertruck will go into mass production in late 2023.
Tesla also started delivering long-haul semi trucks PepsiCo (PEP) in December. It’s unclear how many Semi trucks will be produced in 2023, with base pricing and specifications still unclear. Tesla plans to build a $3.5 billion manufacturing facility in Northern Nevada for semi-trucks, according to the Nevada Independent.
On Wednesday, Tesla confirmed that production and delivery challenges throughout 2022 were “heavily concentrated in China.”
Tesla plans to ramp up its production volume “as soon as possible” to align with its 50% compound annual growth rate (CAGR) target. That goal dates back to 2021. For 2023, Tesla said it expects to produce about 1.8 million vehicles, a 37 percent increase compared to 2022.
But CEO Elon Musk has said that internally Tesla wants to build 2 million EVs.
The EV giant also said the Cybertruck “remains on track to go into production later this year,” but Musk admitted that volume production might not happen until 2024.
The company added that the next generation of its vehicle platform is under development and that additional details will be shared at its Investor Day on March 1, 2023.
Tesla stock: Gains come after price declines
Tesla’s fourth-quarter earnings follow Tesla China’s EV registrations rebounding in the week of Jan. 5-16 after recent big price cuts. The latest registration numbers appear to reflect some benefit from Tesla’s Jan. 6 decision to cut prices in China.
Tesla has cut prices for the Model 3 and Y in China, with the base Model 3 dropping more than 13 percent to $33,570. Local media in China reported that Tesla had received 30,000 orders within three days of the announced cuts, according to CnEVPost.
Tesla also announced price cuts in the US and Europe. This will make more models eligible for a $7,500 tax incentive under the Inflation Reduction Act (IRA).
The EV giant cut prices of the US Model 3 by 6%-14%, depending on the trim. A standard trim Model 3 RWD is down $3,000 to $43,990. With the IRA tax credit applied to the vehicle, consumers who meet the income limits will pay $36,240.
The Performance Model 3 trim dropped $9,000 to $53,990, below the $55,000 threshold for tax credits. Meanwhile, Tesla’s base Model Y is down $13,000, or nearly 20%, to $52,990, also below the tax credit threshold. The Performance variant for this vehicle is down to $56,990, also down $13,000.
Musk told investors on Wednesday that so far in January, Tesla had “seen the strongest year-to-date orders we’ve ever seen in our history.” Tesla’s CEO said orders are currently coming in at “almost double the production rate” and that’s resulting in increased Model Y prices.
“I think there’s a huge number of people who want to buy a Tesla car but can’t afford it. And so these price changes really make a difference for the average consumer,” Musk said.
“It’s always been our goal at Tesla to make cars that are affordable for as many people as possible, so I’m glad we’re succeeding,” he added.
Musk said during the earnings call on Wednesday that Tesla has deployed its Full Self Driving (FSD) Beta for city streets to about 400,000 customers in North America.
The EV giant is currently at about 100 million FSD miles, not including highway driving, according to Musk.
“We wouldn’t have released the FSD Beta if the security statistics weren’t great,” Musk said.
The Tesla CEO added that nearly all Tesla vehicles currently can have self-driving software uploaded to them.
“That means there are millions of Full Self-Driving cars that can be sold at essentially 100% gross margin,” Musk said. “The value of the FSD increases as the autonomous capability increases, and then when it becomes fully autonomous, that’s an increase in value to the fleet that may be the largest increase in asset value of anything in history.”
Tesla stock has soared 43% from a Jan. 6 low of 101.81, hitting the 50-day and 10-week lines.
This is despite the fact that several analysts have also weighed on Tesla stock, lowering their price targets and earnings estimates.
TSLA’s stock ranks third in the Auto Manufacturers industry group. Tesla stock has a Composite Score of 46 out of 99. The stock has a Relative Strength score of 5, an exclusive IBD equity monitor for stock price movement. The EPS score is 75.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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