Interactive Investor

ii view: Tesla issues warning despite record profits

Supply chain challenges persist, but Elon Musk has his foot to the floor. We assess prospects.

27th January 2022 10:45

Keith Bowman from interactive investor

Supply chain challenges persist, but Elon Musk has his foot to the floor. We assess prospects.

Fourth-quarter results to 31 December

  • Total revenue up 65% year-over-year to $17.7 billion
  • Net income up 760% to $2.32 billion
  • Earnings per share up 218% to $2.54

ii round-up:

Electric vehicle maker Tesla (NASDAQ:TSLA) reported record quarterly earnings which beat Wall Street hopes, but warned of ongoing supply chain issues throughout 2022. 

Adjusted earnings of $2.54 per share surpassed analyst forecasts nearer to $2.35, with annual 2021 profit of $7.64 billion exceeding 2020’s $2.55 billion.  

Tesla shares moved between gains and losses in after-hours US trading, having fallen by more than 10% year-to-date. Shares for major US automaker Ford (NYSE:F) are down by around 4% so far in 2022, while the S&P 500 index has retreated by almost 9%.

Tesla offered little in the way of outlook guidance, giving no specific production or profit estimates for 2022. It does however expect to remain microchip limited during the year and will not be introducing any new vehicle models.  

Production of its long delayed Cyber pick-up truck is unlikely to begin until at least 2023, having originally been unveiled in 2019. Tesla production plants have been running below their full capacity for several quarters due to global supply chain challenges. 

Existing manufacturing plants in both Fremont, USA and Shanghai in China are now being joined by new plants in both Austin Texas USA and Berlin Germany. 

Full-year 2021 deliveries, the closest number Tesla offers to sales, rose to 936,172 from 2020’s 499,550. That pushed 2021 auto revenues up 73% compared to the prior year to $47.23 billion.

Energy generation and storage sales of $688 million however proved to be at their lowest since the first quarter of 2021. 

Tesla ended the year with cash of $17.6 billion, up $1.5 billion from the previous quarter. Total debt excluding vehicle and energy product financing totalled $1.4 billion. 

Analysts expect estimates to remain largely unchanged following the results. 

ii view:

Founded in 2003, Elon Musk's Tesla has a stock market value of over $900 billion. That compares to under $80 billion for both US rivals General Motors (NYSE:GM) and Ford, and $127 billion for major European vehicle maker Volkswagen (XETRA:VOW)

For investors, there's rising demand and production and potential to expand into new markets such as India and Russia. Analysts forecast that annual production could eventually hit 3 million units once its new plants are fully operational, up from a current annualised 1.23 million units. Climate change and a US government with green aspirations provide a positive backdrop. Other ventures such as its development of autopilot and full self-driving capabilities, and even a humanoid robot venture, offer longer term excitement. 

But a 900%-plus rise in the share price since pandemic market lows in March 2020 raises valuation questions, and just about all of its more traditional rivals are adding to their line-up of electric or hybrid vehicles. Western relations with China, a core manufacturing location, remain strained, and an estimated price-to-net asset value of around 40 times compares to under three at rivals VW, Ford and General Motors, suggesting the valuation is far from cheap. For now, and while good progress at Tesla continues to be made, there's a lot of good news already represented in the stock price.  


  • Clear customer demand
  • Climate change concerns are growing globally


  • Competition from other manufacturers is increasing
  • Persisting valuation concerns

The average rating of stock market analysts:

Strong hold

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