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Tesla’s (TSLA - Free Report) 10 consecutive quarter-long beat streak snapped as it reported lower-than-expected earnings for the third quarter of 2023. The electric vehicle (EV) behemoth reported earnings per share of 66 cents for the quarter under review, which declined from the year-ago figure of $1.05 and also missed the Zacks Consensus Estimate of 72 cents. Throughout the third quarter, Tesla slashed prices on its inventory vehicles and existing models, which have adversely impacted profits. Total revenues came in at $23,350 million, witnessing year-over-year growth of 9%. The top line, however, fell short of the consensus mark of $24,381 million.
Shares declined more than 4% in after-hours trading following the comprehensive miss and shrinking gross and operating margins. Tesla’s operating margins dipped 964 basis points year over year to 7.6% in the quarter under discussion and also lagged our estimate of 7.9%. The underperformance can be attributed to the high costs involved in scaling up the production of new battery cells, the Cybertruck, and other large projects. Reduced average selling prices (ASPs) for models and forex woes also weighed on the margins.
Tesla has been offering discounts and other incentives in the United States to increase affordability and boost deliveries. Notably, all trims of the Model 3/Y vehicles qualify for the full $7,500 federal tax credit under the Inflation Reduction Act in the United States. Nevertheless, even with these measures, Tesla's share of the EV market in the United States decreased from 60% in the first quarter to 50% in the third quarter, according to data from Kelley Blue Book.
Management stuck to its target of around 50% growth in deliveries in the foreseeable future. For 2023, it expects deliveries to reach 1.8 million units.
Tesla’s third-quarter production totaled 430,488 units (416,800 Model 3/Y, and 13,688 Model S/X), up 18% year over year and surpassing our estimate of 415,645 units. The company delivered 435,059 vehicles, reflecting a year-over-year rise of 27% and topping our estimate of 428,141 units.
The Model 3/Y registered deliveries of 419,074 vehicles, marking year-over-year growth of 29% and outpacing our projection by 7,999 units. Deliveries of the Model S/X totaled 13,688 units, down 31% from the year-ago levels and below our estimate of 17,066 units.
Total automotive revenues of $19,625 million were up 5% year over year and beat our estimate of $21,092 million. The reported figure also included $554 million from the sale of regulatory credits for electric vehicles, which increased 93.7% year over year. Automotive sales, excluding revenues from leasing and regulatory credits, totaled $18,582 million, missing our projection of $19,949 million on lower-than-expected ASPs.
Automotive gross profit came in at $3,668 million. Automotive gross margin came in at 18.6%, down from 27.9% reported in third-quarter 2022 but topping our forecast of 18.2%. This can be attributed to lower-than-expected cost of automotive sales. The metric came in at 15,957 million, below our projection of 17.256 million.
Energy Generation and Storage revenues came in at $1,599 million in third-quarter 2023, higher than the year-ago quarter’s figure of $1,117 million and beating our estimate of $1,570 million. Notably, energy storage deployments increased 90% year over year to 4 GWh, thanks to the ramp-up of the Megapack factory in California, but also topped our projection of 3.86 GWh. Solar deployments, however, declined both on a sequential and yearly basis amid high interest rates and the end of net metering in California. The metric came in at 49 MW, lower than our forecast of 103.8 MW.
Services and Other revenues were $2,166 million, up 31.6% year over year but missing our estimate of $2,351 million. Supercharging, insurance and body shop & part sales drove growth on a year-over-year basis.
Financials
Tesla had cash and cash equivalents of $26,077 million as of Sep 30, 2023, compared with $22,185 million on Dec 31, 2022. Net cash provided by operating activities amounted to $3,308 million in third-quarter 2023. Capital expenditure totaled $2,460 million in the quarter under review.
Tesla generated a free cash flow (“FCF”) of $848 million during the reported quarter, which declined from $3,297 million generated in the year-ago period. Long-term debt and finance leases, net of the current portion, totaled $2,426 million, up from $1,597 million on Dec 31, 2022.
The Zacks Consensus Estimate for ALSN’s 2023 sales and EPS implies year-over-year growth of 9.3% and 26.6%, respectively. The earnings estimate for 2023 has been revised upward by 1 cent in the past seven days. The consensus mark for 2024 sales and EPS implies year-over-year growth of 2% and 6%, respectively. Allison carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of B.
The Zacks Consensus Estimate for ADNT’s fiscal 2023 sales and EPS implies year-over-year growth of 9% and 1,827%, respectively. The earnings estimate for the current fiscal has been revised upward by 4 cents in the past seven days. The consensus mark for fiscal 2024 sales and EPS implies year-over-year growth of 3.4% and 74%, respectively. Adient sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for PCAR’s 2023 sales and EPS implies year-over-year growth of 19.2% and 49%, respectively. Over the past 30 days, PACCAR’s earnings estimate for 2023 and 2024 has been revised upward by 2 cents and 13 cents, respectively. The stock currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A.
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Tesla (TSLA) Q3 Earnings Snap Beat Streak, FCF Falls 78% Y/Y
Tesla’s (TSLA - Free Report) 10 consecutive quarter-long beat streak snapped as it reported lower-than-expected earnings for the third quarter of 2023. The electric vehicle (EV) behemoth reported earnings per share of 66 cents for the quarter under review, which declined from the year-ago figure of $1.05 and also missed the Zacks Consensus Estimate of 72 cents. Throughout the third quarter, Tesla slashed prices on its inventory vehicles and existing models, which have adversely impacted profits. Total revenues came in at $23,350 million, witnessing year-over-year growth of 9%. The top line, however, fell short of the consensus mark of $24,381 million.
Shares declined more than 4% in after-hours trading following the comprehensive miss and shrinking gross and operating margins. Tesla’s operating margins dipped 964 basis points year over year to 7.6% in the quarter under discussion and also lagged our estimate of 7.9%. The underperformance can be attributed to the high costs involved in scaling up the production of new battery cells, the Cybertruck, and other large projects. Reduced average selling prices (ASPs) for models and forex woes also weighed on the margins.
Tesla has been offering discounts and other incentives in the United States to increase affordability and boost deliveries. Notably, all trims of the Model 3/Y vehicles qualify for the full $7,500 federal tax credit under the Inflation Reduction Act in the United States. Nevertheless, even with these measures, Tesla's share of the EV market in the United States decreased from 60% in the first quarter to 50% in the third quarter, according to data from Kelley Blue Book.
Management stuck to its target of around 50% growth in deliveries in the foreseeable future. For 2023, it expects deliveries to reach 1.8 million units.
Tesla, Inc. Price, Consensus and EPS Surprise
Tesla, Inc. price-consensus-eps-surprise-chart | Tesla, Inc. Quote
Key Takeaways
Tesla’s third-quarter production totaled 430,488 units (416,800 Model 3/Y, and 13,688 Model S/X), up 18% year over year and surpassing our estimate of 415,645 units. The company delivered 435,059 vehicles, reflecting a year-over-year rise of 27% and topping our estimate of 428,141 units.
The Model 3/Y registered deliveries of 419,074 vehicles, marking year-over-year growth of 29% and outpacing our projection by 7,999 units. Deliveries of the Model S/X totaled 13,688 units, down 31% from the year-ago levels and below our estimate of 17,066 units.
Total automotive revenues of $19,625 million were up 5% year over year and beat our estimate of $21,092 million. The reported figure also included $554 million from the sale of regulatory credits for electric vehicles, which increased 93.7% year over year. Automotive sales, excluding revenues from leasing and regulatory credits, totaled $18,582 million, missing our projection of $19,949 million on lower-than-expected ASPs.
Automotive gross profit came in at $3,668 million. Automotive gross margin came in at 18.6%, down from 27.9% reported in third-quarter 2022 but topping our forecast of 18.2%. This can be attributed to lower-than-expected cost of automotive sales. The metric came in at 15,957 million, below our projection of 17.256 million.
Energy Generation and Storage revenues came in at $1,599 million in third-quarter 2023, higher than the year-ago quarter’s figure of $1,117 million and beating our estimate of $1,570 million. Notably, energy storage deployments increased 90% year over year to 4 GWh, thanks to the ramp-up of the Megapack factory in California, but also topped our projection of 3.86 GWh. Solar deployments, however, declined both on a sequential and yearly basis amid high interest rates and the end of net metering in California. The metric came in at 49 MW, lower than our forecast of 103.8 MW.
Services and Other revenues were $2,166 million, up 31.6% year over year but missing our estimate of $2,351 million. Supercharging, insurance and body shop & part sales drove growth on a year-over-year basis.
Financials
Tesla had cash and cash equivalents of $26,077 million as of Sep 30, 2023, compared with $22,185 million on Dec 31, 2022. Net cash provided by operating activities amounted to $3,308 million in third-quarter 2023. Capital expenditure totaled $2,460 million in the quarter under review.
Tesla generated a free cash flow (“FCF”) of $848 million during the reported quarter, which declined from $3,297 million generated in the year-ago period. Long-term debt and finance leases, net of the current portion, totaled $2,426 million, up from $1,597 million on Dec 31, 2022.
Zacks Rank & Key Picks
Tesla currently carries a Zacks Rank #3 (Hold).
A few better-ranked players in the auto space include Allison Transmission Holdings (ALSN - Free Report) , Adient PLC (ADNT - Free Report) and PACCAR Inc. (PCAR - Free Report) .
The Zacks Consensus Estimate for ALSN’s 2023 sales and EPS implies year-over-year growth of 9.3% and 26.6%, respectively. The earnings estimate for 2023 has been revised upward by 1 cent in the past seven days. The consensus mark for 2024 sales and EPS implies year-over-year growth of 2% and 6%, respectively. Allison carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of B.
The Zacks Consensus Estimate for ADNT’s fiscal 2023 sales and EPS implies year-over-year growth of 9% and 1,827%, respectively. The earnings estimate for the current fiscal has been revised upward by 4 cents in the past seven days. The consensus mark for fiscal 2024 sales and EPS implies year-over-year growth of 3.4% and 74%, respectively. Adient sports a Zacks Rank #1 and has a VGM Score of A.
The Zacks Consensus Estimate for PCAR’s 2023 sales and EPS implies year-over-year growth of 19.2% and 49%, respectively. Over the past 30 days, PACCAR’s earnings estimate for 2023 and 2024 has been revised upward by 2 cents and 13 cents, respectively. The stock currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A.
You can see the complete list of today’s Zacks #1 Rank stocks here.