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Tesla Just Reported Record Earnings, What's Next?

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Highly Anticipated Earnings Report

Coming into Wednesday, Tesla Inc’s (TSLA - Free Report) fourth-quarter results were some of the most anticipated. Not only because of eccentric CEO Elon Musk but also because of the recent price action. Tesla’s highly vocal bear camp finally won a battle in 2022, sending shares crashing by more than 50%.

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However, Tesla’s stock would not go down without a fight - the product and stock have some of the most loyal followers of any current public company. TSLA rebounded 16.4% over the last month after the company decreased car prices in China to boost demand, and the stock market rebounded.

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Q4 EPS Highlights

Key data points from Tesla’s EPS report include:

·      Non-GAAP EPS of 1.19 vs. 1.12 EST

·      Revenue of 24.3 billion vs. 24.08 B EST

·      Highest quarterly revenue, operating income, and net income in company history.

·      Expected vehicle production for 2023 is expected to be 1.8 million vehicles vs. 2022 production of 1.31 million.

Stock Outlook & Key Drivers

History:Bears have enjoyed some success recently, but it is hard to bet against Elon Musk and Tesla. Despite the recent pullback, TSLA has increased more than 5,000% over the past five years.

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Deliveries & Production:In late 2022, Musk quelled fears by reassuring investors that the automaker is “not facing demand problems despite economic headwinds.” Put simply, the main constraint on further success for Tesla is EV supply, not demand. This quarter management addressed this hurdle. The company anticipates production to increase by 500,000 vehicles next year and production to compound at 50% over the long term. The numbers are staggering when you consider Tesla’s Gigafactory in Shanghai is designed to produce 500,000 Model 3s alone.

Valuation: Tesla’s valuation is as attractive as it has been in years. 6 months ago, the p/e ratio was more than 100x, now it is 44x.

New Catalytst: Tesla to start Cybertruck production this year.

Technicals: As mentioned above, the stock is moving into 50-day moving average resistance in the short-term. However, from a long-term perspective, the stock is starting to bounce off extreme oversold levels – the second most oversold in the company’s history.

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Summary: Currently, it isn’t easy to find a stock similar to TSLA today. The stock has all the attributes institutional investors look for in a stock, including liquidity, profitability, high-growth, and an innovative product. Look for shares to rebound in the long-term if the company can meet its lofty production goals.

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