TSLA: Tesla Misses Delivery Estimates in Q3 of 2022

Over the weekend, Tesla (NASDAQ: TSLA) reported its vehicle production and delivery numbers for Q3 of 2022. It produced 365,000 vehicles and delivered 343,000 vehicles in the quarter that ended in September.

Vehicle deliveries are often the closest approximation of sales reported by Tesla. Analysts tracking the largest electric vehicle (EV) producer expected the company to deliver 364,660 vehicles in Q3.

Tesla also disclosed it produced 19,935 units of higher-priced models such as Model S and X vehicles, while Model 3 and Y accounted for the rest of its vehicles in Q3. In the year-ago quarter, Tesla produced 258,580 vehicles, while vehicle deliveries stood at 254,695 units.

Tesla explained that soaring commodity prices and scalability issues at its new factories in Texas and Germany resulted in lower-than-expected production numbers in the quarter. Further, it also had to temporarily suspend production at the Shanghai factory in July for plant upgrades.

There is a good chance for Tesla stock to move lower in early market trading today due to its unimpressive production and delivery numbers in Q3. TSLA's stock price is currently down over 35% from all-time highs, valuing it at a market cap of $831 billion.

Will TSLA stock price recover in Q4 of 2022?

Despite a challenging macroeconomic environment, Tesla continues to grow its revenue and profits at an enviable pace. In Q2, its sales were up 42% year over year to $16.9 billion. While commodity prices moved higher, Tesla’s pricing power ensured its operating margins improved by 358 basis points to 14.6% as well. In fact, its adjusted net income rose by 57% to $2.27 per share in Q2.

The global shift towards clean energy solutions should act as a massive tailwind for Tesla and its peers. According to research reports, the global EV market is expected to expand by 29% annually through 2030, allowing Tesla to keep widening its revenue and earnings in the upcoming decade. Annual EV sales might surpass 31.1 million units in 2030, up from just 2.5 million units in 2020.

Yes, Tesla will have to wrestle with rising competition from legacy automobile manufacturers such as Ford (NYSE: F) and Volkswagen as well as from new entrants like Rivian (NASDAQ: RIVN) and Lucid Motors (NASDAQ: LCID). But its first mover advantage and market-leading share should allow TSLA stock to deliver outsized gains to investors.

Tesla’s market share in the EV market across the United States, Europe, and China has slumped to 15.6% in Q2 of 2022, from almost 25% in Q2 of 2020. But in the last two years, it has almost tripled vehicle deliveries. For example, its vehicle deliveries surged from 91,000 units to 255,000 in this period.

What next for Tesla stock price and investors?

Tesla continues to aggressively expand its capacity and take advantage of multiple secular tailwinds surrounding the EV space. It should continue to benefit from economies of scale and is forecast to increase adjusted earnings at an annual rate of 55% in the next five years. 

Comparatively, analysts expect Tesla sales to rise from $53.8 billion in 2021 to $121.4 billion in 2023.

So, TSLA stock is trading at 45x 2023 earnings and 6.9x forward earnings, which might seem expensive. But growth stocks command a premium multiple, and Tesla is a quality growth stock. Despite its steep valuation, analysts trading TSLA stock expect shares to rise by almost 20% in the next year.

Related; Apple Stock Price Falls 4% After iPhone Demand Falters