Tesla Q4 preview: Where next for Tesla stock?

Tesla sales continue to hit new records, but will the electric vehicle firm be able to ramp-up capacity and achieve its ambitious growth targets in 2022?

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When will Tesla release Q4 earnings?

Tesla is scheduled to release fourth quarter and full year earnings for 2021 after the market closes on Wednesday January 26.

 

Tesla Q4 earnings preview

Tesla set a new quarterly record for deliveries during the last three months of 2021, breaching the 300,000 mark for the first time. That has installed confidence that Tesla is continuing to navigate the global chip shortage better than its rivals, with the automotive market being hit harder than most by the supply crisis, and can continue to grow output and retain its title as the number of electric vehicle company.

Q4'20

Q1'21

Q2'21

Q3'21

Q4'21

Production

179,757

180,338

206,421

237,823

305,840

Deliveries

180,570

184,800

201,250

241,300

308,600

 

Tesla delivered 936,172 cars over the course of 2021. That was up 87% from the 499,550 deliveries made in 2020, which in turn rose from the 367,500 vehicles sold in 2019. Tesla has said it is aiming to grow deliveries by around 50% each year going forward.

Wall Street currently believes Tesla can ramp-up deliveries by 47% in 2022 by delivering 1.375 million cars this year. Importantly, that will only be possible if Tesla can get its new factories up and running. Its existing site in California only has capacity to make 600,000 cars per year whilst its factory can produce up to 450,000 but is still ramping-up to full capacity. That leaves little room for Tesla to grow production.

CEO Elon Musk is due to visit the new Giga Berlin factory in Germany next month. Tesla had hoped to get the plant going before the end of 2021 but has suffered some delays, but this will be key to boosting output and providing a supply outlet in Europe. Tesla has said the site will produce ‘hundreds of thousands of Model Y vehicles and millions of battery cells’ each year. Meanwhile, its new site in Texas should have produced its first pre-production vehicles before the end of 2021.

The outlook for both sites will be key as they underpin Tesla’s growth story for 2022 and beyond. You can read our 2022 outlook for electric vehicle stocks here to find out more about the challenges and themes the industry will face this year.

Some analysts expect Tesla to confirm reports that have surfaced in recent weeks suggesting its new Cybertruck has suffered further delays and could be pushed back from late 2022 and into 2023. Although not a disastrous delay, it will mean investors will have to prepare for another year without a new model being launched. The truck is set to be built in Texas after Model Y production has been established. Pushing back the timeline could also prompt concerns that other new models that have long been in the pipeline, such as the Tesla Semi and the Roadster, could also be delayed going forward.

Below is an outline of what Wall Street forecasts Tesla will report in the fourth quarter, according to a consensus compiled by Reuters:

($)

Q4'20

Q1'21

Q2'21

Q3'21

Q4'21E

Revenue (mns)

10,744

10,389

11,958

13,757

16,351

Adjusted Ebitda (mns)

1,850

1,841

2,487

3,203

3,892

Adjusted EPS

0.8

0.93

1.45

1.86

2.31

Reported EPS

0.24

0.39

1.02

1.44

1.63

 

If it can deliver as expected in the final quarter, Tesla is on course to report annual revenue of $52.44 billion and adjusted Ebitda of $11.37 billion in 2021. That would be up from the $31.54 billion in sales and $5.82 billion in earnings delivered in 2020.

Tesla’s automotive gross margin has improved and hit new records over the last year as it reaps the benefits from scaling up production and improving the efficiency of production. For example, both the Model 3 and the Model Y share a common platform and Bloomberg analyst Kevin Tynan says the two cars share 75% of their parts. However, overall profitability could come under strain as Tesla bumps-up capex budgets to introduce new capacity and models.

 

Where next for TSLA stock?

Tesla shares have been trending lower since the start of the new year, having slumped over 19% since 2022 started. However, after slipping below both the 50-day and 100-day sma last week, the stock appears to have found a level of support at the current level of $995.

If the stock can hold the $995 level, then it is likely to continue testing the 50-day sma at $1041 before eyeing the 100-day sma at $1052. A break above there would open the door to more upside potential, firstly to $1112, a key level of resistance over the past two months, and then to the 2022-high of $1208.

A break below current levels could be significant as it will open the door to the rising 200-day sma at $955 and then to the 2022-low of $887. Notably, the state of the RSI and the fact the 50-day sma remains below the 100-day sma supports the view the current downtrend has further room to run.

Tesla shares have trended lower since the start of 2022

The 41 brokers that cover Tesla have mixed views on its valuation and on average they rate the stock at Hold with an average target price of $933, implying the stock is over 3% overvalued at present.

 

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