Market analysis

Quarterly Earnings Reports – Tesla

As we reach deeper into earnings season companies compete with each other for investments and look to increase the demand of their stocks as well as prices. Tesla has been one of the most recent Quarterly Earnings Reports which was released before market open on Thursday. The price movement has been in a strong upward trend since the 18th August 2021, traders now are questioning whether the stock is overpriced, so let’s dive in deeper.

Prior to the Quarterly Earnings Reports

At the end of September, Tesla had sold 56,000 cars in the Chinese market, which is 27% higher than in August and is the company’s highest result since the opening of its Gigafactory in Shanghai in 2019. The figure also significantly exceeded the overall 20% decline in the market. As a result of this, the stock managed to narrowly escape the strain on prices within the US equities market.

Since the beginning of the summer months, there has been a decline in sales of electric cars in China against the backdrop of the energy crisis and the scarcity of semiconductors. September sales in the local market bolstered record shipments of Tesla in the third quarter with an increase of 73.2% to 241.3K units. At the same time, the company acknowledged difficulties with the supply chain and logistics in quarter 3, a similar trend is expected in quarter 4.

Tesla’s Reported Earnings

Assets are priced on supply and demand, as a result of this the Earnings Per Share figure is one of the most observed ratios released by the company. This is partially due to the fact it takes into account the supply element, the number of available shares within the market, and the demand which is strongly influenced by company profits. Earnings per Share is simple to understand, it is the company’s earnings divided by outstanding shares.

Below we can see the previous 12 month’s EPS (Earnings per Share) for Tesla

  • 3rd Quarter 2020 – Estimated EPS $0.22 / Reported EPS $0.27
  • 1st Quarter 2021 – Estimated EPS $0.63 / Reported EPS $0.24
  • 2nd Quarter 2021 – Estimated EPS $0.44 / Reported EPS $0.39
  • 3rd Quarter 2021 – Estimated EPS $0.52/ Reported EPS $1.02 – Released this week!

We can see from the above the company has quadrupled the EPS figure in this quarter compared to the first quarter of the year. In addition, the growth in profits the company has beat its estimated EPS which was originally priced in the market. The increase is not only related to the company’s revenue but also to the number of common stocks. The company revenue is $13.76 Billion, higher than the originally predicted $13.63Billion.

Tesla’s Non-Automobile related Projects and Market Conditions

Many traders and individuals instantly think of Tesla as a car manufacturer similar to Ford and Mercedes. However, Tesla is not only mitigating its risk across more industries but also managing to profit from it. Tesla has generated $806 million income from its energy-based projects, which combines solar and energy storage products, and $894 million in services and other revenue. This includes vehicle maintenance and repairs and auto insurance. For its energy and storage side of the business, costs of revenue rose to the highest number in the last five quarters to $803 million during the third quarter.

When looking at the general stock market conditions we can see the price movement is currently bullish and depending on the index we can see full price corrections for any losses made during September of this year. The Nasdaq has increased by 6.60% over the past 17 days while the SNP500 has increased by 5.87%.

The price movement of the stock is without a doubt seeing strong bullish movement to date and has managed to outperform most stocks available on the market. However, even while trading a stock with strong bullish movement and strong potential through the eyes of traders, it is vital to take into consideration risk management and pre-plan in case of any unwanted movement. This should be kept in mind during the decision-making process.

We invite you to watch our webinar highlight shedding further light on Quarterly Earnings Reports and their importance.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.


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