Tesla earnings rebound, but will not achieve its 50% growth target

Tesla reported solid earnings and record revenues for its quarter, but it now claims it will not achieve its goal of a 50% increase in sales this year.

It stated that it still wanted to achieve a 50% increase in sales from the 936,000 cars delivered in 2021, as recently as July. It would have been impossible to reach the 2022 goal given the disappointing deliveries in quarters due to supply chain problems and Covid-related shutdowns in China.

The company previously reported that it had delivered 344,000 cars in its third quarter. This is a record for the company and an increase of 42% over a year ago. To reach the 50% target, it would have to produce another 495,000 cars during the fourth quarter.

Telsa still only has a fraction of the sales of established automakers. It is, however, the most valuable global automaker. Its sales volume makes it worth more than any of the top 10 automakers. Its rapid growth rate is what drives its high stock valuation.

Elon Musk, CEO of Tesla Motors, stated Wednesday that the company was still “looking forward” to a record-breaking fourth quarter. It looks like we’ll have an amazing end to the year, knock on wood.

The company stated that they expect to see a 50% annual increase in vehicle deliveries over a long-term horizon. However, CFO Zach Kirkhorn admitted during an investor call that there was a possibility of a slight under 50% growth in delivery due to an increase in cars in transit by the end.

This was a departure from what Kirkhorn stated in July: “Despite losing more build units than we expected in Q3, we are still pushing for 50% growth this year.” Although this target is more challenging, it’s still possible with strong execution.

Musk claimed that Musk’s miss on the target was due to a logistic problem. The company had difficulty finding the right number of cars-carrying trucks, ships, and trains needed to deliver the orders by the quarter’s end.

Musk stated that Q4 is in high demand. Musk also said that the factories are operating at maximum speed and that every car being made is being delivered.

Adjusted earnings for the company were $3.7 billion. This is 75% more than a year ago but still less than the record earnings it reported in its first quarter. Refinitiv analysts had predicted that the earnings would be $3.5 billion. However, it was higher than what they achieved.

Revenues reached a record $21.5 Billion, an increase of 56% over a year, but less than the $22 Billion forecasted by analysts.

After-market trading saw shares of Tesla (TSLA), fall by around 4% following the result. Through Wednesday’s close, they had already lost 37% this year.

Musk told investors in an attempt to increase the stock price that it was “likely” that the company would do a share purchase back of between $5 billion and $10 billion if its stock. Musk has not done a share purchase. It has instead sold more shares to increase its cash reserves, as share prices have risen in the past.

After Musk’s mention of the buyback shares briefly recovered their after-market losses. However, the stock lost even more ground as the company moved away from its 50% growth target.

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