Tesla's 2022 Financial Report
For 2022, Tesla reported net income of 12.6 billion, or $3.62 per share, on revenue of $81.5 billion, compared with $5.5 billion, or $1.63 per share, on revenue of $53.8 billion in 2021.
Yet Tesla—which chief executive Elon Musk now bills as an artificial intelligence company—fell short of expectations in the fourth quarter despite the results showing substantial year-over-year gains. Revenue came in just under Wall Street estimates but jumped 33% from year-ago levels to $24.3 billion, close to the $24.7 billion expected, according to data provider FactSet. Net income of $3.7 billion fell short of the $4 billion expected but was up nearly 60%. Tesla posted earnings per share of $1.07, less than the $1.13 expected.
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Musk Sees Recession in 2023
Musk cautioned the United States will "probably have a pretty difficult recession this year." While a recession could affect demand, it would also lead to lower input costs and improve margins, he noted. Musk said Tesla is in a good position to withstand what could be a "severe" recession because it has little debt and $22 billion in cash on its balance sheet. In a conference call following the release of earnings, Musk returned repeatedly to his concerns about recession.
Tesla Key Q4 Earnings Takeaways
- Revenue: $24.3 billion versus FactSet estimate of $24.7 billion
- Net income: $3.7 billion versus FactSet estimate of $4 billion
- Earnings per share: $1.07 versus FactSet estimate of $1.13
- Auto gross margin 25.9% in fourth quarter and 28.5% for full year
- Puts 2023 production at 1.8 million cars, potentially 2 million
Musk forecast the company will produce 1.8 million cars, and potentially 2 million, this year based on demand. The company raised the price of its Y model as a result of the strong demand. Musk addressed concerns about the company's strategy of cutting prices to spur demand in China by saying "price really matters" and noted that "it has always been our goal to make cars as affordable as possible."
Tesla Stock Key Stats
- Sector: Consumer Cyclical
- Industry: Auto — Manufacturers
- Fair Value Estimate: $220
- Morningstar Rating: 4 Stars
- Economic Moat Rating: Narrow
- Moat Trend: Stable
Zachary Kirkhorn, Tesla's chief financial officer, said the company was most focused on operating margins, noting that its energy business is growing faster than its vehicle business. Tesla's operating margin fell to 16% in the quarter from 17.2% in the third quarter but rose from 14.7% a year earlier.
The company said it is "making progress" on improving cost controls at its Berlin and Austin plants and that "costs were dropping" commensurate with a rise in production.
Tesla Says Cybertruck on Its Way
Production of its long-awaited Cybertruck is set to begin this summer but the company emphasized that volume won't ramp up until sometime next year.
On whether Tesla is facing brand risk from Musk's ownership of social media platform Twitter, and his active and sometimes controversial social media account, Musk said his 127 million followers was proof of his popularity and that Twitter was "a powerful tool" to drive demand for Teslas. "The net value of Twitter is gigantic," he said.
