Written by Brenda Nakalema

Tesla Crushes Estimates. Leaves Wall Street Speechless.

Tesla beat Wall Street estimates by a yard, and the stock was rising more and more analysts praised the report. …

Tesla hits record quarterly profit amidst supply-chain disruptions

Tesla beat Wall Street estimates by a yard, and the stock was rising more and more analysts praised the report. Shares of Tesla (ticker: TSLA) gained 5.6% in midday trading, hitting $1,032 a share. The S&P 500 was down 0.2%, and the Dow Jones Industrial Average was up 0.1%.

“I am already speechless,” tweeted Pierre Ferragu, a New Street Research analyst, shortly after the release of the results. He expressed his astonishment at Tesla’s roughly 29.5% automotive gross profit margin that was reported for the first quarter. That was a rally from the approximately 29% profit margin reported in the fourth quarter of 2021.

Despite the raw material inflation that Tesla and other auto manufacturers faced, the company was able to release increased margins. Cost-cutting and higher vehicle average selling prices were the winning strategies that resulted in the higher margin.

Ferragu also commented on a chart in Tesla’s earnings report that dealt with competition. Following the Super Bowl, Tesla experienced a boost in orders in the midst of other auto manufacturers’ advertisements- Tesla benefited from the moves made by competitors.

Ferragu rates the shares Buy and has placed a $1,580 price target for the stock. Dan Ives, a Wedbush analyst, is equally bullish and rates the stock Buy. He set his price target at $1,400 a share. Ives described the results as “Cinderalla-like”, with solid numbers produced against a “brutal supply chain backdrop.” Going forward, he is still focused on China, watching closely to see how the company handles that challenge. The Covid restrictions in China have resulted in the Tesla plant staying locked for a couple of weeks. Despite the fact that the plant has been reopened, Tesla suppliers still have to ramp production back up.

“We commend the execution,” wrote Cowen analyst Jeffrey Osborne in his report. He said he was impressed by the fact that Tesla still expects to grow delivery volumes by at least 50% in 2022, despite the supply-chain woes. Despite his excitement, he maintains a Hold rating on the stock. He set his price target at $790 a share.

We “are less enthusiastic about the stock at current valuation given likely peak gross margin,” the analyst added. He fears this is as good as the margins get.

Ryan Brinkman, a J.P Morgan analyst, isn’t bullish about the stock either and rates the stock a sell. However, he did raise his price target after earnings from $330 a share to $395. Although he said the results were strong, he also pointed out that higher-than-expected regulatory credit sales actually drove part of the earnings beat. Tesla generates revenue selling credits earned by selling more than its fair share of low-emission vehicles. Tesla credit sales totalled $679 million in the first quarter. Wall street set expectations at $312 million.

More analyst notes are expected to come out, most likely to praise the company for a great quarter.