Tesla announced Q4 2022 earnings after market close today. Revenue was $24.32B vs $24.16B expected. EPS was $1.19 vs $1.13 expected. At the beginning of this year, they announced underwhelming Q4 vehicle delivery numbers but they still managed to beat earnings this quarter. TSLA 0.00%↑ stock was up 5% after the announcements.
Earlier this month, Tesla cut prices for their cars as much as 20%. Tesla had been raising prices aggressively in 2022, only to cut the prices all at once two weeks ago. I understand they try to price their cars based on supply and demand but as a consumer, I don’t like to play this game. As mentioned previously, I bought a model X Plaid last year. I placed the order in 2021 and the price went up $15K in 2022. The sales rep told us we got a good deal as we were still paying the 2021 price. But then they just dropped the price by $21K so we actually didn’t get a very good deal in the end. This price volatility is not very pleasant and for people who take out loans for their vehicles last year, they probably have very negative equity at the moment. I feel this price game is even more annoying than dealing with sneaky car salesmen. I didn’t expect to hand over $6K pure profits to Elon without any negotiation.
This price cut will certainly also hurt their margins and Tesla warns that there’re many uncertainties ahead and they are conservative with their estimates. TSLA 0.00%↑ stock has dropped a lot since last year. But it’s still expensive. Assuming their EPS is going to be $5 for 2023, their PE ratio will be 30, which in my opinion is still too high. But it’s a narrative stock and we will see how the narrative goes this year.