Another quarter, another blowout earnings for electric vehicle industry leader Tesla (NASDAQ:TSLA). The most recent report from the company came as CEO Elon Musk was mired in rumors that he would be acquiring social media platform Twitter (NYSE:TWTR). As it turns out, we would find out less than a week later that the acquisition was approved by Twitter’s board for $44 billion USD. Shares of TSLA would slide by 12% as the company fell back below a market cap of $1 trillion on the news.
But back to Tesla’s earnings report. TSLA 2022 Q1 results reported record revenues, bringing in $18.76 billion compared to Wall Street’s consensus estimates of $17.80 billion. Earnings per share also topped expectations at $3.22 per share compared to $2.26 per share. Automotive revenue grew by a staggering 87% year over year, while gross margins jumped to 32.9%, a new record for Tesla.
With the recent openings of both the Austin and Berlin GigaFactories, Tesla’s annual production is on track to grow exponentially. In all, Tesla reported 310,048 global vehicle deliveries for the quarter. Musk and other executives reiterated their focus on growing Tesla’s deliveries by 50% in 2022.
Tesla Could Face Q2 Headwinds
There is some concern that the second quarter could lag for Tesla. As impressive as the TSLA Q1 2022 results were, the full extent of the Shanghai lockdowns were not yet felt. Musk noted on the earnings call that the company has lost a month of build volume due to the closure of the Shanghai GigaFactory in April. Some estimates show that the closures could cost Tesla more than 40,000 vehicles for the quarter.
On top of that, the continued concerns over the rising prices of raw materials continue to plague EV makers around the world. Musk recently cited that the cost of lithium could push Tesla to begin mining the precious metal itself. To combat rising prices, Tesla has raised the prices of its vehicles in both China and the US. These are temporary fixes to keep margins higher, although these could also fall the longer the price of materials stays elevated.
Other macroeconomic headwinds that could impact Tesla’s quarter include rising levels of inflation in the global economy. Musk himself stated that US economic inflation is likely higher than what is being reported and will continue to exist through the end of this year.
Tesla Stock Outlook 2022
Ark Invest’s Cathie Wood has long been a Tesla bull. She recently provided a revised price target of $4,600 by 2026, with a bear case of $2,900 and a bull case of $5,800. While price targets can be fun, Tesla investors are aware of the company’s shortcomings as well. Further delays in the long-awaited Cybertruck and Roadster models have been noticeable, as has the continued struggles of the FSD technology. Musk reiterated that Robotaxis could be in production by 2024, but then again the Cybertruck was slated for a 2021 launch.
Still, it’s undeniable the impact that Tesla has had on the global automotive and energy industries. The company has yet to announce anything regarding another stock split later this year. Bullish investors might want to capitalize on some momentary weakness in the stock right now. Others may want to wait until after Q2 earnings which could bring with it another dip.
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