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Why Is Tesla (TSLA) Down 11.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Tesla (TSLA). Shares have lost about 11.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Tesla due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Tesla's Earnings Beat Streak Continues in Q3

Tesla reported third-quarter 2022 earnings of $1.05 a share, up from the year-ago figure of 62 cents and surpassing the Zacks Consensus Estimate of 95 cents. This marked an earnings beat for the company for the seventh time in a row. Higher-than-expected revenues from Energy Generation and Storage and the Services and Other segments resulted in this outperformance. Our estimate for the bottom line was $1.06 a share.

Total revenues came in at $21,454 million, witnessing year-over-year growth of 56%. However, the top line lagged the consensus mark of $22,323 million. The company reported an overall gross margin of 25.1% for the reported quarter. Further, the operating margin came in at 17.2%.

Key Takeaways

Tesla’s production and delivery totaled 365,923 and 343,830 vehicles, reflecting a year-over-year jump of 54% and 42%, respectively. While deliveries hit a record, they lagged the consensus mark of 354,950 vehicles. Our estimate for total deliveries was 349,931 units. The Model 3/Y registered production and deliveries of 345,988 and 325,158 vehicles, marking year-over-year growth of 51% and 40%, respectively. Production and delivery of the Model S/X totaled 19,935 and 18,672 units, respectively, in the quarter under review.

Total automotive revenues of $18,692 million missed the consensus mark of $19,995 million but jumped 55% year over year. The figure also included $286 million from the sale of regulatory credits for electric vehicles, which rose 3% year over year. Automotive gross profit came in at $5,212 million, which missed the consensus mark of $5,880 million. Automotive gross margin came in at 27.9%, contracting 258 basis points from third-quarter 2021.

Energy Generation and Storage revenues came in at $1,117 million in third-quarter 2022 compared with the year-ago quarter’s figure of $806 million. The figure beat the consensus mark of $910 million. Our estimate for the same was $870.4 million. Services and Other revenues were $1,645 million, significantly increasing from $894 million a year ago. The figure also topped the consensus mark of $1,350 million. We had projected revenues from Services and Other segment to come around $1,275.4 million.

Operating expenses totaled $1,694 million in the reported quarter, slightly up from $1,656 million incurred in the corresponding period of 2021.

Financials

Tesla had cash and cash equivalents of $21,107 million as of Sep 30, 2022, compared with $16,095 million on Sep 30, 2021. Net cash provided by operating activities amounted to $5,100 million in third-quarter 2022, jumping 62% year over year. Its capital expenditure totaled $1,803 million, compared with $1,819 million recorded in third-quarter 2021.

Tesla generated free cash flow of $3,297 million during the reported quarter, rocketing 148% year over year. Long-term debt and finance leases, net of current portion, totaled $2,096 million, down from $6,438 million on Sep 30, 2021.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Tesla has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tesla has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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