On Tesla’s Earnings Call, Elon Musk Discusses The Takeover Of Twitter And The Possibility Of A Recession

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Last Updated on October 20, 2022 by Bitfinsider

Following the closing bell, Tesla announced its earnings for the third quarter, and during the subsequent earnings call, company executives addressed a wide range of questions, including concerns regarding the macroeconomy and CEO Elon Musk’s impending takeover of Twitter.

Following the release of the results, the stock price dropped by approximately 5% after hours.

Earnings came in at $1.05 per share, compared to the adjusted forecast of 99 cents per share based on responses from analysts polled by Refinitiv.
According to Refinitiv, revenue came in at $21.45 billion, below the forecast of $21.96 billion.
In accordance with generally accepted accounting principles (GAAP), Tesla’s net income for the third quarter of 2022 reached $3.33 billion, while automotive gross margins remained unchanged at 27.9%. This figure is identical to where it was in the second quarter of 2022. Profits totaling $1.62 billion were reported by Tesla for the same quarter as the previous year.

During a conference call held on Wednesday to discuss the company’s financial results, Musk responded to questions from shareholders regarding the demand for electric vehicles and the possibility of a stock buyback.

Musk stated, “I can’t emphasize enough that we have excellent demand for Q4, and we expect to sell every car that we make for as far into the future as we can see.” “I can’t emphasize enough that we have excellent demand for Q4,” “The factories are operating at full capacity, we are delivering each and every car that we produce, and our operating margins continue to be healthy.”

He went on to say that Tesla is likely to conduct a “meaningful buyback” in the following year, with the potential amount ranging between $5 billion and $10 billion, subject to approval from the board.

Additionally, he expressed his optimism regarding the company’s future by stating, “I’m of the opinion that we can far exceed Apple’s current market cap.” In point of fact, I can envision a scenario in which Tesla’s value could eventually surpass that of both Apple and Saudi Aramco put together. However, this does not imply that it will be simple or straightforward.

Shareholders posed questions to executives of Tesla about the macroeconomic factors affecting the company’s operations in China and beyond.

According to Musk, “a recession of sorts” is occurring in China, and it is being driven primarily by the property markets. “A recession of sorts” also exists in Europe, and it is being driven by energy. He continued by saying, “North America’s in pretty good health, even though the Fed is raising interest rates more than they should, but I think they’ll eventually realize that and bring them back down again.”

Musk also addressed his impending acquisition of Twitter in response to a different question, saying, “I think it’s an asset that has sort of languished for a long time but has incredible potential.” Musk is in the process of purchasing Twitter. In a later statement, he elaborated, saying, “The long-term potential for Twitter is an order of magnitude greater than its current value.”

It is anticipated that Musk will sell some of the substantial number of Tesla shares he owns in order to contribute funds toward the completion of the $44 billion take private transaction.

Q3 earnings details

The automotive division of Tesla achieved revenue of $18.69 billion, which is a 55% increase from the previous year. Cost of revenue for the core automotive business of the company rose to $13.48 billion during the quarter, up from $10.52 billion during the second quarter. This increase was in line with the increase in sales of automobiles and came after a previous increase to $10.52 billion. The automotive regulatory credits that Tesla received accounted for 1.5% of the company’s total automotive revenue, which was $286 million for the quarter.

On Wednesday, Tesla included the following statement in its shareholder deck: “Over a multi-year horizon, we expect to achieve 50% annual growth in vehicle deliveries.” This statement was a reiteration of previous guidance.

The company reaffirmed that it will start delivering its electric heavy-duty truck, the Semi, in the month of December. Additionally, the company confirmed that it will produce the Semi in Nevada, which is also where it will produce battery packs for its vehicles sold in the United States. In December of 2017, the Semi was presented for the first time.

The start of production of Tesla’s Cybertruck pickup has not been given a specific date by the company; they have only stated that it will be manufactured in Texas after the production of Model Y has reached full capacity in that state.

In a previous report, the company stated that its total deliveries for the quarter that ended on September 30 reached 343,000, and that total vehicle production reached 365,000. Deliveries are the number that comes closest to representing sales that Tesla has reported. Since that weekend report was released on October 2, the stock price has fallen by more than 17%.

Although the number of vehicles that have been produced and delivered has increased, the quality of the service that is provided has not kept pace and has been a source of frustration for many Tesla owners.

In July, Elon Musk, the CEO of Tesla, stated that he was “Excited to work with Tesla Service to enable same-hour service as often as possible!” Using strategies developed for the Formula One pit crew on Teslas.”

In contrast, Tesla only increased the number of stores and service centers it operates by 6% during the third quarter of 2022, when compared to the previous quarter’s total of 41 locations. It did, however, increase the number of mobile service vehicles in its fleet, which service technicians use to drive to customers’ locations when it is feasible to perform repairs on the vehicles there. Tesla reported that it had 728 store and service locations as of the end of the third quarter, along with a fleet of 1,532 mobile service vehicles.

Services and other revenue increased to 1.65 billion dollars, which includes fees for customers powering up their cars at Tesla Supercharging stations, sales of merchandise branded with the Tesla name, and repairs for customers’ cars that were no longer covered under warranty.

In the earnings report for the third quarter, the company stated that it was “transitioning to a smoother delivery pace” and issued a warning about a potential transportation capacity bottleneck that could delay the delivery of new vehicles during the final weeks of the quarter.

The energy division of Tesla brought in a total revenue of $1.12 billion for the company during the quarter. This division is responsible for the installation of solar rooftops as well as the sale and installation of backup batteries for residential, commercial, and utility use.

The majority of the growth in energy revenue came from increased sales of energy storage systems. The company reported that it had installed energy storage systems with a capacity of 2,100 megawatt-hours (or 2.1 gigawatt hours) during the quarter and noted that “Demand for our storage products remains in excess of our ability to supply.” [Case in point:]

Both Tesla’s automotive division and its energy division, as well as other manufacturers of electric vehicles, compete with one another for the supply of battery cells. In the presentation that Tesla gave to its shareholders, the company stated, “We continue to believe that battery supply chain constraints will be the main limiting factor to the growth of the EV market in the medium and long terms.”

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