Tesla Q1 Earnings Review
Bad
- Revenue +24%
- Gross profit -17%
- Gross Margins: drop from 25% to 19%
Good
- Energy showing huge growth
At first glance, the numbers look bad. Growth is declining, margins are shrinking etc.
But to understand why this is happening, we need to connect the numbers back to Tesla's Strategy.
Earnings Comments:
"Pushing for higher volumes & a larger fleet is the right choice here versus a lower volume & higher margin..." - Elon Musk
Volume vs Margin:
1. Profit Margins: optimizing for short-term
2. Volume production: more for long-term
With a recession & high int rates, it's hard to keep prices high for a big-ticket item like a car.
At the same time, this macro crisis presents a good opportunity to build up the fleet. Laying the groundwork for the cars to generate profit via FSD.
But to understand why this is happening, we need to connect the numbers back to Tesla's Strategy.
Earnings Comments:
"Pushing for higher volumes & a larger fleet is the right choice here versus a lower volume & higher margin..." - Elon Musk
Volume vs Margin:
1. Profit Margins: optimizing for short-term
2. Volume production: more for long-term
With a recession & high int rates, it's hard to keep prices high for a big-ticket item like a car.
At the same time, this macro crisis presents a good opportunity to build up the fleet. Laying the groundwork for the cars to generate profit via FSD.
Tesla's dual strategy:
1. Pricing out competitors
2. Focus on customer LTV value(vs short-term profits)
Apple comparison:
Similar to how Apple built up its ecosystem back then. They earn more from the apps & services provided, rather than a one-time sale of iPhones.
Of course, building up the sticky ecosystem takesyears. It won't be overnight.
Right now, Tesla is pursuing a similar strategy.
To summarize, the price cuts are a calculated move to price out competition, while positioning themselves for future monetization through autonomy.
Will share my thoughts in a follow-up post tmr
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underminer : yeah, but amazing to me it has turned around $ 5 since this morning. Go figure.
TeslaSmurf : Tesla as a company has ZERO issues. Its financials are EXTREMELY solid and the sales keep growing at an impressive path. The stock is a different question: if they want to hold a 32-35 EPS RATIO the growth has to be at least equal. Otherwise the value/growth/decrease of the stock could tend to align to those of the sector BUT… it won’t happen: just have to be patient until the Cybertruck release and the building of the new Gigafactory in Mexico.
101826591 : arent you the fake guru?
ZnWC : Can use this chart as summary
ZnWC : Thanks for the article is very clear and objective.
Cathie Wood buys Tesla's share is an endorsement that Tesla's fundamental is still solid. Recently there are many skeptism about Tesla's FSD and Robotaxi as the next profit source. It'll be difficult to convince retail investors to buy the stock until something concrete is announced. It'll be more practical to see how cybertruck affect Tesla's sales expected to mass produce in Q3 this year.
Cathie Wood’s Ark Buys $42 Million In Tesla—Predicts 1,100% Rise For The Stock
https://www.moomoo.com/community/feed/110252624314374?data_ticket=212ca245a589f1e400fb2e247953bc77&futusource=nnq_personal_host&content_type=feeddetail
SweetRide TeslaSmurf: Solid INTERNATIONAL company
NiceOne : i believe in musk!!
73158385 : Yes ,very well done 100%
