Tesla Stock (NASDAQ:TSLA)
On Friday evening, Tesla (NASDAQ:TSLA –2.65%) submitted its quarterly report, providing investors with one more opportunity to look back on a dissatisfying quarter and analyze it in greater depth.
There aren’t a lot of surprises in the filing, which is good news, but it hasn’t prevented Wall Street from lowering earnings projections, price targets, and ratings ever since Tesla disclosed lower-than-expected automotive gross profit margins this past week. This is despite the fact that there aren’t a lot of surprises in the filing, which is good news.
On Friday evening, Tesla (NASDAQ:TSLA) submitted its quarterly report form, also known as a 10-Q, to the Securities and Exchange Commission. A normal quarterly press release does not contain nearly as much information as a 10-Q does.
For example, there is additional information regarding the costs associated with the warranty. Warranty costs that remain steady are seen favorably by investors as an indication that product quality is holding steady. In addition to this, they want to see stability to guarantee that the influence of warranties on reported profit margins is not having a significant effect that is not being accounted for.
The warranty expense for Tesla’s first quarter came in at $532 million, which is equivalent to 2.7% of automobile sales. This figure represents a decrease from the 2.9% of sales recorded in the company’s fourth quarter of 2022.
In 2022, Tesla’s warranty charges accounted for between 2% and 3% of the company’s automobile sales. Things aren’t really moving in a new direction. When compared to this, the costs associated with warranty work at Ford Motor Company (NYSE:F) have averaged between 3% and 4% of the company’s car sales over the past number of years.
The amount of money that Tesla spent on its manufacturing plants and equipment in the first quarter increased to $2.1 billion, up from $1.9 billion in the fourth quarter and up from $1.8 billion in the first quarter of 2022. In 2022, the first quarter saw capital spending of $1.8 billion.
Tesla did not have a new facility that was being built at the time, but the firm is larger now, and it requires more to support operations as any company grows. Therefore, Tesla is increasing capacity at its existing plants while getting ready to ship its Cybertruck at the end of this year. Over the course of the previous year and a half, the proportion of total sales that was allocated to capital expenditures averaged out to roughly 9 percent.
While approximately 4% of sales went toward capital spending at Ford in 2022, the company’s revenues are not truly expanding. The 4% of sales is providing support for the company’s current operations while also assisting it in making the shift toward selling more electric vehicles. In 2023, it is anticipated that Ford’s capital spending will account for around 5% of sales.
Even if regulatory credit sales are accounted for in Tesla’s financial report, investors still prefer to act in a trend-following manner. The fact that the corporation produces a greater number of zero-emission vehicles than its “fair share” in comparison to the quantity that the governments of some nations require causes it to be awarded credits. Credit sales increased to $564 million during the first quarter of 2023, which is a significant increase from the $467 million recorded during the previous period.
During the past five years, Tesla has produced around $6.3 billion in revenue from the sale of credit, which accounts for approximately 3% of total vehicle sales and approximately 25% of the total operating income reported. During the course of the previous year, regulatory credits were responsible for approximately 13% of the operating income that was reported.
The quarterly report doesn’t contain a lot of unexpected information for investors. Wall Street continues to reduce its numbers regardless of this fact. Sunday, a Daiwa analyst named Jairam Nathan lowered his forecast for the company’s earnings per share in 2023, bringing it down from $3.75 to $2.95. His new price goal is $185, which is lower than the previous target of $218. He did not change his rating of Buy for Tesla shares.
Wall Street forecasts an EPS of approximately $3.50 for the year 2023, which is a decrease from approximately $3.90 before profits were released on April 19 and a decrease from approximately $5.50 at the beginning of the year, before Tesla began to aggressively lower prices.
The price objective forecasted by analysts has decreased to approximately $191 per share. According to FactSet, it was slightly above $200 before earnings and was projected to open in 2023 at almost $255 a share.
Approximately 51% of the analysts who cover the stock currently rank the shares as Buy. This is a decrease from the previous year’s level of 53% before earnings and from approximately 64% at the beginning of 2023. About 58% of the stocks that make up the S&P 500SPX –0.20% had to Buy ratings assigned to them on average.
During Monday’s premarket trade, Tesla stock had a decline of approximately 0.8%. Futures contracts for the S&P 500 and the Nasdaq CompositeCOMP –0.71% were both trading about 0.1% lower. The price of Tesla stock fell by almost 10% when earnings were reported this past week, although it is still up over 34% for the year.
Featured Image: Unsplash @ Brecht Denil
