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Investor's Corner

Tesla (TSLA) Q1 2023 earnings results: $23.3B in revenue, 19.3% non-GAAP gross margins

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Tesla (NASDAQ:TSLA) posted its Q1 2023 earnings report after markets closed today. The results, which were discussed in the Q1 2023 Update Letter, were released after the closing bell on Wednesday, April 19, 2023.

Tesla’s earnings come on the heels of the company’s aggressive pricing strategy and record delivery numbers. In the first quarter, Tesla produced 440,808 vehicles and delivered 422,875.  That’s a new record for the EV maker, which is quite impressive considering that Q1 is relatively short and it gets hit by holidays like the Chinese New Year.

The following is a quick overview of Tesla’s Q1 2023 results.

Earnings per Share

Tesla’s earnings per share for the first quarter of 2023 was listed at $0.85, which was right in line with analyst expectations of $0.85 as per estimates compiled by Refinitiv. 

Revenue

Tesla posted revenues of $23.33 billion, which was a slight beat of the $23.21 billion that was expected by analysts compiled by Refinitiv. Automotive revenue, a core segment of Tesla’s business, was listed at $19.96 billion in Q1 2023. 

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Overall, revenue grew 24% YoY in Q1 to $23.3 billion year-over-year. This was impacted by a growth in vehicle deliveries, reduced ASP year-over-year, and negative FX impact of $0.88 billion.

Gross Margin

Tesla’s gross margin for the first quarter of 2023 was listed at 19.3%. In Q1 2022, Tesla’s gross margin was listed at 29.1%.

Profitability

Tesla’s operating income decreased YoY to $2.7 billion in Q1, resulting in a 11.4% operating margin. The company noted that operating income was affected by growth in vehicle deliveries, reduced ASP YoY, higher raw material, commodity, logistics and warranty costs, cost of production ramp of 4680 cells, and lower credit revenue, among others. 

Net Income and GAAP Earnings

Net income, however, came at $2.51 billion, down about 24% from the past year. GAAP earnings were listed at $0.73, which is down about 23% from Q1 2022. 

Cash

At the end of Q1 2023, Tesla’s cash, cash equivalents, and investments rose sequentially by $217 million, reaching a total of $22.4 billion. This was fueled in no small part by free cash flow of $441 million, though it was somewhat tempered by other financial activities such as debt repayments.

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On Pricing and Affordability

A key focus of this quarter’s results would be Tesla’s pricing, which mostly got lower in Q1. In the recently released Update Letter, Tesla explained that while most of the automotive sector is still struggling with the economics of their respective EV programs, the company is looking to leverage its position as a cost leader. Tesla also highlighted that its pricing strategy considers a long-term view per vehicle.

“Our near-term pricing strategy considers a long-term view on per vehicle profitability given the potential lifetime value of a Tesla vehicle through autonomy, supercharging, connectivity, and service. We expect that our product pricing will continue to evolve, upwards or downwards, depending on a number of factors. Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate. We expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale.”

Vehicle Program Highlights

Tesla shared a number of updates on its vehicle programs in its Q1 2023 Update Letter. The company, for one, revealed that Cybertruck factory tooling is on track, and it is currently producing Alpha versions of the all-electric pickup truck.

Over the first quarter of 2023, the Tesla Model Y crossover also became the best-selling vehicle in Europe in Q1. The vehicle was also the best-selling vehicle in the United States during the quarter, at least outside pickup trucks.

Tesla’s Q1 2023 Update Letter can be found below.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Elon Musk

Tesla analyst says Musk stock buy should send this signal to investors

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish.”

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(Credit: Tesla)

Tesla CEO Elon Musk purchased roughly $1 billion in Tesla shares on Friday, and analysts are now breaking down the move as the stock is headed upward.

One of them is William Blair analyst Jed Dorsheimer, who said in a new note to investors on Monday that Musk’s move should send a signal of confidence to stock buyers, especially considering the company’s numerous catalysts that currently exist.

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

Dorsheimer said in the note:

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish. This purchase is Musk’s first buy since 2020. To us, this sends a strong signal of confidence in the most important part of Tesla’s future business, robotaxi.”

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Musk putting an additional $1 billion back into the company in the form of more stock ownership is obviously a huge vote of confidence.

He knows more than anyone about the progress Tesla has made and is making on the Robotaxi platform, as well as the company’s ongoing efforts to solve vehicle autonomy. If he’s buying stock, it is more than likely a good sign.

Tesla has continued to expand its Robotaxi platform in a number of ways. The project has gotten bigger in terms of service area, vehicle fleet, and testing population. Tesla has also recently received a permit to test in Nevada, unlocking the potential to expand into a brand-new state for the company.

In the note, Dorsheimer also touched on Musk’s recent pay package, revealing that William Blair recently met with Tesla’s Board of Directors, who gave the firm some more color on the situation:

“We recently participated in a meeting with Tesla’s board of directors to discuss the details of Musk’s performance package. The board is confident of its position in the Delaware case and anticipates a verdict by end of year. It does not expect a similar situation to occur under new Texas jurisdiction. Musk has the board’s full support, and we expect he’ll get more than enough shareholder support for this to pass with flying colors.”

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Tesla stock is up over 6 percent so far today, trading at $421.50 at the time of publication.

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Elon Musk

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

Prior to this latest move, Musk’s most recent purchase was for about 200,000 shares worth $10 million in 2020.

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Gage Skidmore from Surprise, AZ, United States of America, CC BY-SA 2.0 , via Wikimedia Commons


Tesla (NASDAQ:TSLA) shares rose on Monday after CEO Elon Musk disclosed a rare insider purchase of company stock worth about $1 billion. 

A filing with the U.S. Securities and Exchange Commission (SEC) revealed that Musk acquired 2.57 million shares last Friday at various prices. The move represents Musk’s largest TSLA purchase ever by value, as per Verity data.

Elon Musk’s TSLA purchase

The disclosure sent Tesla shares up more than 8% in premarket trading Monday, as investors read the purchase as a notable vote of confidence, as stated in a CNBC report. Tesla stock had closed slightly lower Friday but remains more than 25% higher over the past three months. It should be noted that prior to this latest move, Musk’s most recent purchase was for about 200,000 shares worth $10 million in 2020.

Market watchers say the purchase could help shore up investor sentiment amid a volatile year for TSLA stock. Shares have faced pressure from a variety of factors, from year-over-year sales challenges due to the new Model Y changeover, political controversies tied to Musk, and reduced U.S. incentives for EVs under the Trump administration. Nevertheless, analysts such as Wedbush’s Dan Ives stated that Musk’s purchase was a “huge sign of confidence for Tesla bulls and shows Musk is doubling down on his Tesla A.I. bet.”

Tesla and Elon Musk

Musk already owns about 13% of Tesla, and his latest purchase comes as the company prepares for a key shareholder vote in November. Investors will decide whether to approve a compensation package for Musk that could ultimately be worth as much as $975 billion if ambitious market value milestones are achieved. The package has a long-term target of pushing Tesla’s market capitalization to $8.5 trillion, compared with about $1.3 trillion at Friday’s close.

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Wall Street’s current consensus price target still implies a roughly 20% decline from current levels, though some Tesla bulls remain optimistic that the company could shift its focus toward autonomy, AI, and robotics. Musk has also asked shareholders to approve an investment into his latest venture, xAI.

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Investor's Corner

Tesla bear turns bullish for two reasons as stock continues boost

“I think from a trading perspective, it looks very interesting,” Nathan said, citing numerous signs of strength, such as holding its 200-day moving average and holding against its resistance level.

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Credit: Tesla Manufacturing

A Tesla bear is changing his tune, turning bullish for two reasons as the company’s stock has continued to get a boost over the past month.

Dan Nathan, a notorious skeptic of Tesla shares, said he is changing his tune, at least in the short term, on the company’s stock because of “technicals and sentiment,” believing the company is on track for a strong Q3, but also an investment story that will slowly veer away from its automotive business.

“I think from a trading perspective, it looks very interesting,” Nathan said, citing numerous signs of strength, such as holding its 200-day moving average and holding against its resistance level.

He also said he believes a rally for the stock could continue as it heads into the end of the quarter, especially as the $7,500 electric vehicle tax credit is coming to an end at the end of the month.

With that being said, he believes the consensus for Q3 deliveries is “probably low,” as he believes Wall Street is likely underestimating what Tesla will bring to the table on October 1 or 2 when it reports numbers for the quarter.

Tesla shares are already up over five percent today, with gains exceeding nine percent over the past five trading days, and more than fourteen percent in the past month.

While some analysts are looking at the performance of other Mag 7 stocks, movement on rates from the Federal Reserve, and other broader market factors as reasoning for Tesla’s strong performance, it appears some movement could be related to the company’s recent developments instead.

Over the past week, Tesla has made some strides in its Robotaxi program, including a new license to test the platform in the State of Nevada, which we reported on.

Tesla lands regulatory green light for Robotaxi testing in new state

Additionally, the company is riding the tails of the end of the EV tax credit, as inventory, both new and used, is running extremely low, generally speaking. Many markets do not have any vehicles to purchase as of right now, making delivery by September 30 extremely difficult.

However, there has been some adjustments to the guidelines by the IRS, which can be read here:

Tesla set to win big after IRS adjusts EV tax credit rules

Tesla is trading at around $389 at 10:56 a.m. on the East Coast.

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