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Tesla (TSLA) Q3 2021 earnings: What to expect

Tesla's Fremont Factory. (Credit: peekaystudio/Instagram)

Tesla (NASDAQ:TSLA) is set to release its Q3 2021 Update Letter after markets close on Wednesday, October 20, 2021. Tesla seems on track to meet its goal of delivering 50% more vehicles compared to the previous year, especially since the company has been weathering the ongoing supply chain disruptions very well. 

Tesla’s Q3 2021 earnings come at a rather positive time for TSLA stock, which was at $864.27 as of October 19, 2021. So far, TSLA shares are up about 19.5% year-to-date (YTD) from where it ended last year at $707.67 per share. This is right in line with the S&P 500’s return of 19.1% YTD. That being said, TSLA shares have provided a total return of about 87.8% over the past year, far above the S&P 500’s total return of 28.4% over the same period.

With the company posting record deliveries of over 241,000 vehicles worldwide in the third quarter, here is what to expect when Tesla posts its Q3 2021 earnings on Wednesday. 

Earnings

Analysts polled by FactSet expect Tesla to report adjusted earnings of $1.58 per share. This is a notably higher estimate compared to the company’s performance in Q3 2020, when Tesla posted adjusted earnings of $0.76 per share. Estimize, which aggregates estimates from a variety of sources, is slightly more optimistic at $1.79 per share. 

Revenue

FactSet consensus estimates that Tesla would be posting revenue of $13.7 billion for the third quarter. In comparison, Tesla posted revenue of $8.77 billion in the third quarter of 2020. Estimize’s forecasts are a bit more optimistic once more at $13.9 billion in revenue. 

Profitability

Wall Street currently expects Tesla’s profitability to drop in the third quarter, with gross profit margins projected to dip below 24%. In comparison, Tesla’s gross profit margins were above 24% in Q2 2021. While these estimates seem conservative, Tesla may pleasantly surprise due to the increased production of Model 3 and Model Y in China. Since vehicles produced in Giga Shanghai have higher margins, the company’s profit margins could hold up. 

Possible TSLA Movement

Considering that Tesla has opted not to provide specific guidance for the third quarter, the decision of whether the company crushed, met, or fell below expectations would likely rely on how specific analysts would interpret the Q3 2021 results. As such, it may be best for shareholders to expect little or even negative movement in TSLA stock, similar to previous profitable quarters

Tesla will post its Q3 2021 Update Letter after markets close on Wednesday, October 20, 2021. Tesla management, which may or may not include CEO Elon Musk, would then hold a live Q&A at 4:30 p.m. Central Time (5:30 p.m. Eastern Time) to discuss the company’s financial and business results, as well as its outlook.

Disclaimer: I am long TSLA

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Tesla (TSLA) Q3 2021 earnings: What to expect
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