Investors keep watchful eye out for Tesla’s results after Shanghai factory shutdown
Analysts are keen to hear if CEO Elon Musk will discuss his $43bn bid to buy Twitter when the electric carmaker presents its quarterly results
19 April 2022 - 15:52
by Hyunjoo Jin and Nivedita Balu
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FILE PHOTO: A truck transports new Tesla cars at its factory in Shanghai, China, in this May 13 2021 file photo. Picture: REUTERS/ALY SONG
Tesla investors are waiting to see on Wednesday whether the electric car group maintains its ambitious 2022 delivery target as its biggest factory, Shanghai, grapples with a Covid-19 shutdown and new plants lift output slowly.
Tesla reports quarterly results, and analysts are also asking whether CEO Elon Musk will discuss his $43bn proposal to buy Twitter and use some of his Tesla shares to help fund the deal.
The Covid-19-related suspension of Tesla’s Shanghai factory, combined with the costs of ramping up new factories in Berlin and Texas, are likely to have weighed on its first-quarter earnings, analysts said.
Musk said in January that Tesla’s volume growth would comfortably exceed 50% from last year, meaning that Tesla expects to deliver more than 1.4-million vehicles this year.
Tesla navigated the global supply chain crisis better than other rivals, posting record deliveries and earnings for several quarters. But its factory in Shanghai was suspended for more than three weeks after the Chinese city rolled out lockdown measures to combat a surge in Covid-19 cases.
Tesla plans to gradually resume production this week in Shanghai.
Morningstar analyst Seth Goldstein said: “I’ll be looking for more long-term commentary for management. How quickly do they expect them to get up to normal run rates? Are there any issues they’ve had in production? When do they expect its Shanghai factory to resume full production?
“You have a lot of fixed costs to get the new plants up and running, but not a lot of production to spread the costs around,” said Goldstein.
Tesla is expected to report March quarter revenue of $17.80bn, largely unchanged from the December quarter but more than 70% higher than that of the previous March quarter, according to Refinitiv data.
Refinitiv’s mean analyst estimate for Tesla is for earnings of $2.26 per share. This is up from 93c per share a year earlier, but on a quarter-on-quarter basis it marks the first quarterly fall in two years.
Musk delivered Tesla’s first Texas-made Model Y vehicles at a glitzy event early in April, but no Texas vehicles are listed on Tesla’s order website yet.
“It’ll probably be a while before the Texas factory can get up to full speed,” said Guidehouse Insights analyst Sam Abuelsamid, citing challenges of launching volume production of 4680 cells likely to be used in the Texas vehicles.
Analysts and investors are also asking how Musk’s pursuit of Twitter will affect his running of Tesla. Musk, CEO of SpaceX, has said he is splitting his time between Tesla and the rocket company.
“Running Twitter would be a possible distraction for a CEO that already has a full plate,” Wells Fargo said in a report.
Even if Musk brings in private equity partners to his Twitter bid, he is going to be a substantial shareholder in the social media company, meaning that he would probably have to sell some Tesla shares to finance the deal, said Goldstein.
Musk said last week that he was not sure whether he would be able to acquire Twitter and that he has a Plan B if Twitter rejected his offer.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Investors keep watchful eye out for Tesla’s results after Shanghai factory shutdown
Analysts are keen to hear if CEO Elon Musk will discuss his $43bn bid to buy Twitter when the electric carmaker presents its quarterly results
Tesla investors are waiting to see on Wednesday whether the electric car group maintains its ambitious 2022 delivery target as its biggest factory, Shanghai, grapples with a Covid-19 shutdown and new plants lift output slowly.
Tesla reports quarterly results, and analysts are also asking whether CEO Elon Musk will discuss his $43bn proposal to buy Twitter and use some of his Tesla shares to help fund the deal.
The Covid-19-related suspension of Tesla’s Shanghai factory, combined with the costs of ramping up new factories in Berlin and Texas, are likely to have weighed on its first-quarter earnings, analysts said.
Musk said in January that Tesla’s volume growth would comfortably exceed 50% from last year, meaning that Tesla expects to deliver more than 1.4-million vehicles this year.
Tesla navigated the global supply chain crisis better than other rivals, posting record deliveries and earnings for several quarters. But its factory in Shanghai was suspended for more than three weeks after the Chinese city rolled out lockdown measures to combat a surge in Covid-19 cases.
Tesla plans to gradually resume production this week in Shanghai.
Morningstar analyst Seth Goldstein said: “I’ll be looking for more long-term commentary for management. How quickly do they expect them to get up to normal run rates? Are there any issues they’ve had in production? When do they expect its Shanghai factory to resume full production?
“You have a lot of fixed costs to get the new plants up and running, but not a lot of production to spread the costs around,” said Goldstein.
Tesla is expected to report March quarter revenue of $17.80bn, largely unchanged from the December quarter but more than 70% higher than that of the previous March quarter, according to Refinitiv data.
Refinitiv’s mean analyst estimate for Tesla is for earnings of $2.26 per share. This is up from 93c per share a year earlier, but on a quarter-on-quarter basis it marks the first quarterly fall in two years.
Musk delivered Tesla’s first Texas-made Model Y vehicles at a glitzy event early in April, but no Texas vehicles are listed on Tesla’s order website yet.
“It’ll probably be a while before the Texas factory can get up to full speed,” said Guidehouse Insights analyst Sam Abuelsamid, citing challenges of launching volume production of 4680 cells likely to be used in the Texas vehicles.
Analysts and investors are also asking how Musk’s pursuit of Twitter will affect his running of Tesla. Musk, CEO of SpaceX, has said he is splitting his time between Tesla and the rocket company.
“Running Twitter would be a possible distraction for a CEO that already has a full plate,” Wells Fargo said in a report.
Even if Musk brings in private equity partners to his Twitter bid, he is going to be a substantial shareholder in the social media company, meaning that he would probably have to sell some Tesla shares to finance the deal, said Goldstein.
Musk said last week that he was not sure whether he would be able to acquire Twitter and that he has a Plan B if Twitter rejected his offer.
Reuters
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