What to look for in Tesla's earnings after the stock up 24% in March?
Key takeaways:
- Why is it important to read earnings reports?
- What to look for in Tesla's earnings report?
- Tesla's gross margin led the auto industry.
- Can Tesla continue to improve gross margin in 22Q1?
- What to look for in Tesla's earnings report?
- Tesla's gross margin led the auto industry.
- Can Tesla continue to improve gross margin in 22Q1?
$Tesla (TSLA.US)$ is due to report its first-quarter 2022 earnings report on Wednesday, April 20, 2022, after the U.S. stock market closes.
The electric vehicle leader remains the focus of earnings season as it's also one of the most sought-after stocks in the market for retail and institutional investors. History shows that Tesla's stock price has been active both before and after earnings. Big swings could be a well-known feature of Tesla stock.
In March, Tesla's stock price has risen about 24%*, once again entering the trillion-dollar market value club. Will this momentum continue and push Tesla to $1,200, near its all-time high of $1,243.49?
Much depends on the earnings report. The delivered results can speak to Tesla's operational efficiency, and the outlook can serve as a guide for future growth.
- Why is it important to read earnings reports?
Financial reports are investment guides that give you the basic information to discover valuable stocks.
Not only will you get detailed business/operating data from three financial statements, but you will also gain a better understanding of the management team - how they handle problems, and their vision for the business.More importantly, you will know the company's market share, the performance of its competitors by reading lots of earnings reports of an industry.
Warren Buffett has emphasized the importance of reading earnings reports in numerous public interviews. He thinks the earnings report gives him a quick look at what's going on in the company and possible trends behind the operating data. Reading earnings reports is very useful, and you can get clear indications from the changing data and lesser-known facts that are the basis for finding good businesses to invest in.
- What to look for in Tesla's earnings report?
Investors who have been following Tesla and reading Tesla's financial results easily know that gross margin is a core metric.
What is gross profit margin? Why is it a key metric for Tesla's earnings?
For manufacturing enterprises, especially in the vehicle manufacturing industry, profitability indicators are often an important reference factor for analyzing their market competitiveness, mainly including gross profit margin and net profit margin.
Gross margin, or gross margin ratio, is equal to the difference between net sales and cost of goods sold (or cost of sales) divided by net sales, expressed as a percentage.
Gross margin can be used to measure a company's efficiency or to compare two companies of different market capitalizations.
The higher the gross margin, the more capital a company retains.Generally speaking, the higher the gross profit margin, the stronger the competitiveness of the company's products, indicating that consumers are willing to pay higher prices than similar products.
What's more, when the industry is in a downturn or a price war occurs, companies with high gross profit margins have more room for price reductions and promotions than companies with low gross profit margins.
- Tesla's gross margin led the auto industry. Could it remain competitive amid a supply crisis?
Before diving into specific data comparisons, let's take a look at the top 7 automakers by market cap worldwide:
Continuous growth
Tesla's gross margin has grown year-over-year for eight consecutive quarters.
Leading the peers
Leading the industry in gross margin means it has more pricing power over its suppliers and has more room to adjust prices in response to sluggish consumer purchasing power.
In the 2021Q4 quarter, Tesla's gross profit margin increased by 42.26% year-on-year to 27.35%. It's quite encouraging for an asset-heavy automaker to maintain gross margins amid high inflation and supply chain challenges.
- Can Tesla continue to improve gross margin in 22Q1?
Tesla has relatively high gross margins in the auto industry. So, is there room for improvement in the upcoming Q1 2022 report?
Investors could look for clues from the following three aspects.
Production. The auto industry is a scale effect industry. The larger the production scale, the lower the cost and the higher the gross profit margin.
In the first quarter of this year, Tesla produced more than 305,000 vehicles and delivered more than 310,000 vehicles, despite ongoing supply chain challenges and factory closures. This compares to 180,338 in 21Q1 and 306,000 in 21Q4.
In the first quarter of this year, Tesla produced more than 305,000 vehicles and delivered more than 310,000 vehicles, despite ongoing supply chain challenges and factory closures. This compares to 180,338 in 21Q1 and 306,000 in 21Q4.
Material prices. In the first quarter of this year, the prices of some raw materials in the new energy vehicle industry chain rose sharply due to the combined influence of supply chain and inflation factors. The sharp rise in raw material prices is bound to put pressure on gross profit margins.
Selling prices. Since the end of 2021, the prices of Tesla's various models have risen several times, from 4% to 10%, which is good for gross profit margins.
In March, Tesla raised prices on all U.S. models, as shown in the chart above. Similar price hikes have occurred in China.
Short-term price increases are undoubtedly conducive to improving gross profit margins, while in the long term, a healthy business model should be driven by both quantity (market share) and price (competitiveness).
Taking the above factors into consideration, what's your prediction on Tesla's Q1 gross margin? Can it sustain the growth trend? Will the supply chain crisis affect its second-quarter and full-year growth guidance?
You can find answers in financial reports and executive shareholder letters and moomoo will provide live broadcast of its earnings call. Maybe you'll hear Elon Musk's comments about buying $Twitter (Delisted) (TWTR.US)$. (Click to book)
Tip:
After earnings report, you can check Tesla's latest gross margin on moomoo
How to>> Detailed Quotes – Financial Tab – Key Indicators (Gross Margin)
If you would like a more in-depth look at the definition of gross margin and how it differs from net margin, click the 📖 book icon. It will take you directly to the Learn center.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Moomoo Learn OP : What's your prediction on Tesla's Q1 gross margin? Can it sustain the growth trend? And why?
Share your thoughts with mooers. 5 mooers with insightful answers will be rewarded with 20 points.
jwl8338 : Like Tesla
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Canopus : As long as Tesla, Inc. continues to increase production capacity, the gross profit margin will be more.
Milk The Cow :