Tesla Inc. (ticker: TSLA) is one of the companies that have been severely affected by the chip shortage that has hit the whole automotive industry as a result of disruption in supply chains around the world due to the Covid-19 pandemic.
The global chip shortage has forced numerous car manufacturers to make big orders of computer chips so that they can keep manufacturing cars and meet their production goals for this fiscal year. It should be noted that computer chips make up about 40% of a new car’s cost.
Even with placing big orders of computer chips, automakers have found it rather challenging to access all the chips they would require to ensure optimal production of cars they have planned to produce. This is because there are delays at different ports as the number of employees shipping companies hire is reduced due to COVID-19, and there is also a global shipping container shortage.
As a result, there has been a drop in the number of new cars as production has reduced significantly. Some companies have been forced to hold off the manufacture of new models altogether and have decided to concentrate on producing only those profitable models high in demand. In contrast, others have begun selling cars without elements that require the chips like navigation and collision detection systems. This has impacted the price of cars because; high demand plus low supply has resulted in increased prices.
Automakers will lose an estimated $110 billion in revenue and costs involved due to the chip shortage this year, according to data from AlixPartners.
Tesla CEO Elon Musk has voiced his concern about this ongoing shortage, and last month, he announced that the company decided to delay the launch of its Semi Truck until 2022. However, that is not the only Tesla car that is delayed because of the effects of the coronavirus pandemic that has disrupted operations.
Yesterday, Wednesday, September 1, 2021, Musk tweeted, while replying to a user who asked the flamboyant CEO for an update about the Tesla Roadster, which is being redesigned, that it will most likely be available in 2023.
“2021 has been the year of super crazy supply chain shortages, so it wouldn’t matter if we had 17 new products, as none would ship. Assuming 2022 is not mega drama, new Roadster should ship in 2023,” Musk replied.
Back in 2017, Tesla said it expected that the new ultra-luxury sports car codenamed Roadster to be available in 2018, but the company did not fulfil that promise, although it had requested interested customers to pay up to $250,000 both reservation and upfront payment for the first 1,000 “founders series” Roadsters.
One of the Roadster specifications is that it will be extremely fast, going from zero to 60 miles per hour in only 1.9 seconds. At top speed, the sports car will go at more than 250 mph, and when fully charged, users will drive 620 miles before the next charge. Tesla is constructing another plant in Austin, Texas, but Musk said that the Roadster would most likely be built in its factory in California.
Last month, Tesla released a better than expected earnings report for its second quarter of the 2021 fiscal year (Q2 FY2021) that ended on June 30, 2021, where the company exceeded $1 billion in profits for the first time in its 18 years of existence. Tesla’s sales were nearly doubled in Q2 FY2021, beating Wall Street expectations by far.
Tesla stock has had a somewhat calm few months, growing nearly 7% in the previous six months. The company has underperformed the benchmark S&P 500 index by registering a gain of 4% year to date, while the index has gained 21% in the same period. Tesla’s stock is currently going for $734.09 per share.
Chewy shares tumble
Chewy, Inc. (ticker: CHWY), an American online retailer of pet food and other pet-related products, released its earnings report for Q2 FY2021 after market close yesterday, and its results are not what investors wanted to see or hear.
The report shows that the company’s revenue rose 27% in the past 12 months to $2.16 billion, but this is below analysts’ expectation of $2.20 billion. Analysts also expected Chewy to register a loss of 2 cents per share in Q2 FY2021, but the company lost 4 cents per share instead. This lacklustre performance in the previous quarter led to the drop in the price of Chewy’s shares in extended trading yesterday, falling as low as 11%, and it was down 9.9% in premarket trading this morning. Chewy’s shares are now trading at $83.47 each.
The company’s guidance for Q3 FY2021 did not help matters. During the earnings calls yesterday, Chewy said that it expects its third-quarter sales to be between $2.20 billion and $2.22 billion, which is slightly lower than analysts’ expectations, who had projected the company to post $2.23 billion in sales for Q3 FY2021.
However, Chewy CEO Sumit Singh is not concerned about the company’s drop in after-hours trading. According to CNBC Business, Singh is pleased with its performance in the last quarter and is even more excited about its future performance. Singh’s comments carry more weight because analysts have kept holding the company in high regard, as evidenced by their estimates.
As an online retailer, Chewy is one of the companies that have hugely benefitted from the coronavirus pandemic as stay-at-home directives forced more people to buy stuff online. The company has said there has also been an increase in pet adoption.
As other companies that hugely benefitted from lockdown have seen their performance calm down as the economy reopens and people increase their social engagements, Chewy’s has not been any different, and Singh expected that. Chewy’s 27% growth in Q2 FY2021 is 42% lower than its growth in the same quarter last year, 47%.
Putting these metrics aside, Singh asserted that other statistics show that the company is heading in the right direction, saying that, “Customer spending on our platform is at an all-time high. In Q2 FY2021, our net sales per active customer was $404, up 13.5% compared with the same period last year.” Chewy’s active customers also grew 21.1% year over year to 20.1 million.