7/21/2022: Tesla Revenue Dropped in Q2
Tesla couldn't produce vehicles fast enough to meet demand
Tesla reported its first sequential decline in quarterly revenue since Q1 2021. Overall, Q2 2022 is a good quarter for them despite production challenges, including COVID shutdown at its Shanghai plant. They made $2.2B in profits and basically all the cars are sold out. I placed an order for Model S this past March and my estimated delivery is in October. According to the company, global supply-chain disruptions and labor shortages, among other challenges, kept Tesla from consistently running its factories at full capacity, which affected their gross margin.
Overall, it’s a great quarter for Tesla. They are still aiming for 50% annual revenue growth for FY 2022. But their valuation is kinda insane in my opinion. Let’s suppose they make $10B profit this year, with their market cap of ~$840B. The P/E ratio is like 84!!! Maybe I am old school but I simply don’t understand how they can maintain this valuation for the long run. They need to triple their profits to bring their P/E below 30. Let’s assume they could maintain good pricing power. They will probably still need to scale up their production at least 2X, which is a lot of capital expenditures. We also don’t know if the current auto boom would continue. There’s a potential risk that the future demand doesn’t meet the extra capacity they are building. I think TSLA 0.00%↑ is a super risky investment at the current valuation. I am glad that they dumped majority of their BTC holdings though. Investing in BTC makes no sense for an automaker like Tesla.