Investors have been paying much attention to Tesla Inc. (ticker TSLA) since the company released its earnings report for the second quarter of its fiscal year (Q2 FY2021) in August, in anticipation of how the company will perform in Q3 FY2021. There have been several events that have happened in the first three quarters that investors and analysts believe have had an impact on Tesla’s performance this year so far.
These include the company’s $1.5 billion investment in the world’s largest cryptocurrency bitcoin early this year, and the subsequent U-turn that followed CEO Elon Musk’s comments about bitcoin, the lawsuit between Elon Musk and Tesla shareholders about Tesla’s $2.6 billion acquisition of SolarCity, computer chip shortages that have hit the automobile industry due to supply chain disruptions, growing competition in China, among others.
Amidst all this, Tesla has stood strong to hit record vehicle deliveries in Q3 FY2021, and its Q3 earnings report released yesterday, Wednesday, October 31, 2021, after the closing bell beat Wall Street expectations.
The company said in its report that it earned profits of $1.6 billion, or Earnings Per Share (EPS) of $1.44, which is a big jump from just $331 million, or EPS of 27 cents reported in the same quarter 12 months ago. When adjusted for one-time items, Tesla registered an EPS of $1.86. In contrast, consensus analysts surveyed by FactSet expected Tesla to register EPS of 1.62 on revenue of $14 billion. The company’s Q3 report shows that its revenue was $13.8 billion, slightly below analysts’ expectations. However, this is way higher than the $8.8 billion the company earned in Q2 FY2020.
The company also provided guidance for its Q4, but this was not well received by investors after the company said that its factories will certainly not be able to run at full speed because of the ongoing chip shortages, port congestion, and other supply chain disruptions, and this would impact its performance as we wind up the fiscal year.
While talking about the company’s Q4 guidance, Tesla’s Chief Financial Officer (CFO) Zach Kirkhorn said that “the ongoing chips and auto parts shortages and problems with logistics have meant that Tesla hasn’t run its factories at full capacity,” adding that people want to buy a Tesla [car] but the challenges mentioned above do not allow the company to increase production capacity fast enough.
“We’re trying as hard as we can to maximize that capacity and to be able to meet the demand that we’re receiving,” Kirkhorn said during the earnings call yesterday that CEO Elon Musk missed. With these comments from Tesla’s CFO, it means that people who place their orders for a new Tesla EV may have to wait for a few months before they could have their orders served.
Early this month, the company announced that its Q3 vehicle deliveries hit a new record as Musk urged employees to double their effort towards the end of the quarter to ensure that the company meets its targets in the North America, European, and Asian markets. Kirkhorn noted that although this was achieved, it was “exceptionally difficult to achieve.”
After the release of the Q3 FY2021 earnings report yesterday, Tesla stock fell more than 1% in after-hours trading to close the day trading at $865.80 a share. However, it has recovered from that fall today, gaining 2.74% to currently trade at $889.40 a share.
PS: Share prices are quoted in real-time and can change at any time.