Unveiling Tesla’s (TSLA) Earnings Report for Q3 2023: Insightful Analysis and Promising Prospects

Tesla released its third-quarter results after trading hours on Wednesday. Following the release, the stock initially rose by 2.4%, but later dropped by over 4% as CEO Elon Musk expressed caution regarding the profitability timeline of the Cybertruck and the company’s focus on affordability in a high-interest rate environment.

Here’s a breakdown of Tesla’s report compared to analysts’ expectations:

• Earnings: Adjusted earnings per share of 66 cents vs. expected 73 cents
• Revenue: $23.35 billion vs. expected $24.1 billion

This marks the first time since Q2 2019 that Tesla has missed both earnings and revenue estimates.

Tesla executives mentioned their plans for a new factory in Mexico, but Musk emphasized the importance of reducing car prices before pursuing the Mexico factory fully.

Musk said, “I’m concerned about the high interest rate environment we’re in,” highlighting that potential car buyers focus heavily on their monthly payments. He further added, “We need to make our products more affordable in order for people to be able to buy them.” He referred to cost reduction as a “Game of Thrones, but pennies.”

Tesla announced on Twitter that Cybertruck production is on track for this year, with first deliveries scheduled for November 30th. Musk, however, tempered expectations for the Cybertruck’s financial performance, stating that it would take 12 to 18 months for it to become a significant positive cashflow contributor.

During the quarter, Tesla reported $19.63 billion in automotive revenue and $1.56 billion in revenue from its energy generation and storage business. Notably, regulatory credits accounted for $554 million of the automotive revenue.

The company’s GAAP net income for the quarter was $1.85 billion, or 53 cents per share. Total gross profit declined by 22% compared to the previous year.

In its shareholder presentation, Tesla highlighted cost reduction efforts and mentioned an increase in research and development expenses. Musk revealed that Tesla is rewriting its driver assistance systems using machine learning.

Musk did not provide a specific timeline for a robotaxi-ready vehicle, but stated that Tesla believes all its cars are capable of full autonomy.

In the energy sector, Tesla saw a 90% increase in energy storage deployments, but solar installations dropped by 48% compared to the previous year.

This was Tesla’s first earnings call since its CFO, Zachary Kirkhorn, stepped aside. Vaibhav Taneja now holds both the CFO and Chief Accounting Officer roles.

Towards the end of the call, Musk expressed concern about the global economy due to ongoing conflicts. He compared Tesla to a ship in a storm, noting the challenges it may face.

SEE ALSO: Jim Cramer’s Investing Club shares what investors should listen for in an company’s earnings call