4/19/2023: Tesla Earnings Fell in Q1
revenue growth is rapidly decelerating
Tesla reported Q1 2023 earnings after market close today. Revenue was $23.33 billion vs $23.21 billion expected. Adjusted EPS was $0.85 vs $0.85 expected. Net income was $2.51 billion, down 24% YoY while GAAP EPS was $0.73, down 23% YoY. Operating margin was 11.4%, down from 19.2% a year ago. Tesla said underutilization of new factories, higher material costs and lower credit revenue contribute to the compression of the operating margin.
Overall, Q1 was a solid quarter for Tesla but as mentioned in my previous post as shown below, Tesla stock is way overvalued and they need perfect execution plus perfect macro environment to maintain their high stock valuation. Unfortunately, they no longer sell out their inventories and they have to cut prices multiple times to spur demand for their cars, including another $2000 price cut on Model 3 announced yesterday. Not just Tesla, the pandemic boom of car sales is ending. Kelly Blue Book published a new report last week saying the consumers are finally able to purchase new cars below MSRP after twenty months. This is great news for consumers but terrifying news for Tesla shareholders.
Tesla’s stock price did go down 33% since my July 2022 post but its current P/E ratio is still above 50. With its decelerating revenue growth, compressing operating margin, waning consumer demand and intensifying competition from other car makers, the path ahead for Tesla will be rough. I don’t believe its narrative based stock valuation can last. Eventually reality will catch up with it.
S/X delivery to production gap was rather interesting.
Are they shifting into a volume/discount brand?