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Tesla reported record Q1 earnings after the market close Wednesday. The takeaway was $TSLA with the foresight of tying up key commodities such as nick
[See the full post at: Tesla Delivers Record Earnings Despite Global Supply Chain Headwinds]Tesla dribblers lower on report that NHTSA has opened a special investigation on a crash in CA, according to Reuters
$TSLA AFTER HOURS
706.88-2.94 (-0.41%)Tesla (TSLA (721.52 -53.48) after Mr. Musk’s comments about the economy.
After a Reuters report was released stating that CEO Elon Musk has a “super bad feeling” about the economy and that TSLA will cut about 10% of its jobs.
The declaration comes on the heels of a warning of a looming “economic hurricane” from JPMorgan Chase (JPM) CEO Jamie Dimon, was made in an email to other corporate executives.
Musk’s ominous outlook also reminds us of an email that Uber (UBER) CEO Dara Khosrowshahi sent to his employees in early May. In that email, he described a “seismic shift” underway in the market that prompted him to scale back on UBER’s hiring plans while ramping up cost-cutting efforts.
hould the economy enter a downturn, it could be the blow that finally breaks TSLA’s seemingly unstoppable momentum. Until now, the leading EV maker has managed to weather a major supply chain storm and runaway raw materials inflation, generating impressive results over the past several quarters. In Q1, the company crushed EPS and revenue estimates, fueled by a 69% jump in production and a surge of 636 bps yr/yr in automotive gross margin to 32.9%. Underlying these remarkable results is a red-hot market for EVs, which hit another gear this spring as gas prices soared throughout the country.
With economic risks and uncertainties on the rise, that strong demand and consumers’ willingness to absorb TSLA’s recent price hikes may subside. During economic downturns, consumers tend to hang onto their current vehicles longer, looking to squeeze as much mileage out of them as possible. This works in the favor of auto part retailers such as AutoZone (AZO), O’Reilly Automotive (ORLY), and Advance Auto Parts (AAP).
Musk’s email about the economy and job cuts isn’t the only concern facing TSLA investors.
Recent lockdowns in China will significantly impair production and delivery totals for Q2. According to Reuters, its Shanghai facility was closed for 22 days and was operating at about 70% capacity earlier this week. Since the Shanghai plant accounts for more than a third of TSLA’s total deliveries, the disruptions there are bound to impact its Q2 results.
During the Q1 earnings conference call, Musk commented that a 60% yr/yr increase in deliveries is possible this year, but that’s looking increasingly unlikely.
Musk’s $44 bln acquisition of Twitter (TWTR) continues to swirl in the background. There was some hope among TSLA investors that Musk would abandon the deal due to questions regarding fake accounts, but those hopes were dashed last week when he increased his financial commitment to $33.5 bln. The further TSLA shares slide, the more stock he will potentially have to sell to finance the deal, which is adding fuel to the fire.
The prospect of TSLA cutting 10% of its workforce — equating to roughly 10,000 employees — seemed highly improbable a couple weeks ago. While supply chain issues and factory closures have created major challenges for TSLA in the past, robust demand and solid execution has allowed it to withstand those headwinds. If Musk’s prediction regarding the economy comes to pass, though, the strong demand that TSLA has relied upon so heavily could weaken.
Tesla CEO Musk comments on the company’s two factories in TX and Berlin “losing billions of dollars,” according to Automotive News
The J.D. Power 2022 U.S. Initial Quality Study released on Tuesday June 28 12:00 p.m.
For auto stocks covering automobile brands.
The study will include Tesla $TSLA for the first time in its industry average. via
@JDPowerAutosHeads up Electric Vehicle P&D’s Watch for updates on monthly deliveries from Chinese automakers Li Auto $LI, Nio $NIO and XPeng $XPEV
Tesla $TSLA may also post its quarterly deliveries report on Friday – July 1
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