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3 Key Takeaways From TSLA Stock’s Q3… and What to Expect Next

  • Tesla (TSLA) reported earnings for Q3 yesterday.
  • The electric vehicle (EV) leader missed on revenue but beat on earnings.
  • TSLA stock is falling and investors should prepare for a rocky fourth quarter.
TSLA stock - 3 Key Takeaways From TSLA Stock’s Q3… and What to Expect Next

Source: Ivan Marc / Shutterstock.com

After markets closed yesterday, Tesla (NASDAQ:TSLA) reported earnings for the third quarter of 2022. After spending the month on a steady downward trajectory, TSLA stock needed a positive catalyst.

Unfortunately for investors, the EV leader didn’t have as much good news to report as Wall Street hoped. While Tesla posted a slight beat on adjusted earnings per share, it fell short of analyst predictions for revenue, reporting $21.45 billion versus the projected $22.09 billion. And while automotive gross margins stayed the same as the previous quarter at just shy of 28%, they did not demonstrate any improvement.

While TSLA stock is currently down 5%, it is important for investors to see the bigger picture when it comes to Tesla’s Q3 earnings. The revenue miss supports the bearish thesis that Tesla isn’t selling as many cars as it should be. Additionally, Elon Musk made it clear during the earnings call that he is focused on moving ahead with his acquisition of Twitter (NYSE:TWTR). Experts have agreed that Musk taking over the social media platform likely won’t be good for TSLA stock.

Let’s take a closer look at what investors should take away from the Tesla Q3 earnings report… and what they can expect on the road ahead.

TSLA Stock: Still Facing Supply Chain Constraints

Since before 2022 began, Tesla bears have raised concerns regarding supply chain problems. Specifically, they’ve worried that it won’t be able to procure the resources it needs to continue scaling production. The Q3 earnings report did not do anything to assuage these fears.

In fact, Tesla noted that “supply chain bottlenecks” pose a significant challenge, specifically with regards to battery production. As the company noted in its shareholder deck:

“We continue to believe that battery supply chain constraints will be the main limiting factor to EV market growth in the medium and long terms.”

While that doesn’t mean that Tesla won’t be able to meet future demand, it does strongly suggest that TSLA stock may be in for some pain the coming months. Last week brought more negative news on the EV battery front when Tesla reported that it would be pausing the launch of its battery production facility in Germany until 2024.

No Cybertruck Production Updates

Investors were likely hoping for an update on the long-awaited Tesla Cybertruck. Unfortunately, the Q3 earnings report did not bring any exciting production news.

While Musk told investors that Tesla is “in the final lap on Cybertruck,” he did not have any firm dates as to when the vehicle will be released. He describes the vehicle as “Hall of famer. Next level,” but cites global supply chain issues as the primary factor holding it up. The CEO reiterated that it won’t be happening until at least mid-2023. The Cybertruck has been pushed back multiple times but followers of the futuristic vehicle don’t seem to be losing hope.

However, Cybertruck fans did receive a  positive update recently. Teslarati reported yesterday that Tesla is planning on building the Cybertruck battery packs at its Fremont, California gigafactory. While there is still no release date on record, this news indicates that Tesla is progressing toward getting the Cybertruck onto the road.

Musk’s Eyes Are Still on Twitter

As investors expected, Musk also discussed his Twitter acquisition on yesterday’s earnings call. However, when the topic came up, he turned some heads when he admitted that he and his fellow investors are “obviously overpaying for Twitter right now.” He carefully emphasized, though, that he still believes strongly in the investment. “The long term potential for Twitter in my view is an order of magnitude greater than its current value,” he stated.

While that may be ultimately good for Musk, some experts are concerned that the deal will push TSLA stock down in the short term. Bill George of Harvard Business School recently voiced concerns regarding the distraction it could pose for the Tesla CEO. Additionally, his X Holding Company plans aren’t likely to resonate well with Wall Street and could compromise Tesla stock even more. The earnings call confirmed that while Musk is well aware that he is overpaying for Twitter, it isn’t affecting his decision.

What Comes Next for TSLA stock

It’s also worth noting that Tesla’s previous guidance hasn’t changed. “Over a multi-year horizon, we expect to achieve 50% annual growth in vehicle deliveries,” the company noted in its shareholder deck.

While that may be achievable, it doesn’t change the fact that TSLA stock is likely in for a turbulent fourth quarter.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/10/3-key-takeaways-from-tsla-stock-q3-and-what-to-expect-next/.

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