Tesla earnings: EV maker expects weaker quarter due to China factory shutdown
Yahoo Finance’s Pras Subramanian joins the Live show to discuss why 2022 production target is key in Tesla’s second-quarter earnings, the impact of China’s factory shutdown, and the outlook for Tesla amid Elon Musk’s Twitter trial.
Video Transcript
BRAD SMITH: Tesla earnings, switching gears here, out today after the bell. The company is expected to post its first sequential quarterly profit decline in over a year, as it looks to recover from its shutdown in Shanghai. Pras Subramanian is here with us. Pras, what should we be looking out for here?
PRAS SUBRAMANIAN: Yeah, Brad, so kind of a down quarter. We kind of expect that because of all the things that have happened with Tesla and China. They're expecting $16.88 billion, so doown around 2% compared to last year. Adjusted EPS of $1.83 a share for the quarter.
A lot of the profitability metrics like adjusted net profit, operating profit, and EBITDA all going to be down over 10%, right, because of just the issues they face. But looking ahead, they want to look at their kind of production delivery forecast. Are they able to meet that 1.4 to 1.5 million that they're expected to sort of hit in 2022 in terms of production and deliveries? That's sort of the big question.
Emmanuel Rozner at Deutsche Bank says, yes, they will. He says buy the shares now in terms of accumulation is now a weakness because he thinks that they will actually reiterate that production forecast and also sort of set up for a better run-up into the back half of the year because of watching Berlin, watching Shanghai, and watching Austin, the ramp-ups they're having. So hopefully, for Tesla and shareholders, that this is actually a bad quarter in the books. But then hopefully looking forward, they have something to look forward to going ahead.
BRIAN SOZZI: Yeah, Wedbush analyst Dan Ives out with a preview, I think questioning a bit how Tesla's business holds up during a recession.
PRAS SUBRAMANIAN: Yeah, the question is, will demand go away? And I think Ives was talking about how he thinks there's so much pent-up demand that it'll take a lot for it to actually kind of decrease and actually in seeing numbers come down. I think he expects them to continue selling as much as they can build going forward. And if you hit that, if Giga Austin and Giga Berlin kind of go online fully, they're going to be up over 2 million units of deliveries per year, which is a lot. And I wonder if there is still enough demand for those vehicles. I think they are so far.
JULIE HYMAN: And then there's also sort of the Twitter overhang, I think as well. Yesterday, Elon Musk and his team were dealt a setback because the trial is going to be fast tracked. And I wonder if that's-- I mean, he doesn't tend to get on the earnings call, right? So I don't know if we're going to get anything out of this to sort of help us understand how that's affecting what's going on at Tesla.
PRAS SUBRAMANIAN: Yeah, I'm still not sure if he's actually gonna be on that call. He hasn't actually said one way or the other. But I bet it'll come up. He doesn't have to at the trial, so it's going to be kind of-- he'll let his lawyers handle that. So he'll be kind of more focused on Tesla right now. But you're right. It is an overhang, of course, this whole distraction of Twitter. But it seems to be sort of, fast track that trial, see what happens. Maybe he can stay focused on the cars and the EVs and all that stuff.
JULIE HYMAN: We'll see.
BRIAN SOZZI: Yeah, all right, bring on Elon. All right, Pras Subramanian, thanks so much.
