Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Is Tesla Stock A Buy After Its Q3 Earnings Beat?

By Investing.com (Haris Anwar/Investing.com)Stock MarketsOct 22, 2021 04:01AM ET
www.investing.com/analysis/is-tesla-stock-a-buy-after-its-q3-earnings-beat-200605899
Is Tesla Stock A Buy After Its Q3 Earnings Beat?
By Investing.com (Haris Anwar/Investing.com)   |  Oct 22, 2021 04:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Tesla (NASDAQ:TSLA) produced another blockbuster earnings report this week, posting record sales and profit despite an extremely challenging operating environment for car producers.

The results mark the ninth straight quarter of profit for Tesla. During the period that ended Sept. 30, its sales rose 57% to $13.8 billion, while per share profit rose to $1.86 a share on an adjusted basis, beating the $1.67 a share average of analysts’ estimates.

Wall Street analysts were particularly impressed by the California-based automaker’s strong margins amid a global supply-chain crunch that has crippled the auto industry. The company’s automotive gross margin came in at 28.8%, and its operating margin was 14.6%.

Tesla delivered 241,300 cars worldwide in the third quarter, a record for the company. Tesla currently makes the Model S, X, 3 and Y at its factory in Fremont, California, and the Model 3 and Y at its plant in Shanghai. More than 96% of sales in the quarter were the Model 3 and Y.

But a strong third-quarter failed to fuel further gains in the electric car-maker’s stock, which fell as much as 2% in early trading Thursday, a sign that the shares may take a breather after more than 50% rebound from the lowest point this year. Tesla closed Thursday at $893.70, up 3.22% on the day.

Tesla weekly chart.
Tesla weekly chart.

One possible explanation of this muted reaction in the market came from Tesla itself, as it warned that the supply-chain disruptions could impact its ability to ramp up production in the remaining part of the year. Tesla Chief Financial Officer Zachary Kirkhorn said on an analysts' call:

“Due to parts shortages and logistics variability, we have not been able to run our factories at full capacity. Customers are having to wait longer for vehicles."

Kirkhorn, in a Wall Street Journal report, said the company needs to continue pushing to lower outlays given rising commodity and labor costs.

“We have to overcome cost increases that are outside of our control.”

Lofty Valuation

In addition to supply-chain obstacles, Tesla’s high valuation leaves little room for less-than-perfect execution. Tesla’s shares are very much reflecting that strength after a very powerful rally in the past quarter.

Going forward, it could be a slow and gradual move higher, given the fact that Tesla has become the most expensive stock on the NYSE FANG+TM index.

Bernstein, which has an underperform rating on Tesla, said in its note yesterday that investors should play Tesla trade with caution.

“We continue to struggle to justify TSLA’s valuation, which is higher than all other major automakers combined and appears to imply huge volume and industry leading profitability going forward, which is historically unprecedented."

Bank of America in its note to clients also raised similar points, highlighting Tesla’s rich valuation.

Its note said:

“Despite the arguably encouraging 3Q results and TSLA’s continued execution, we have trepidation that TSLA stock may already be priced to perfection such that near-term earnings beats may be insufficient to get bulls incrementally positive on the stock.”

Bottom Line

Tesla produced a very impressive Q3 report that shows its superior production capabilities when compared with other makers. But this performance failed to lift the stock, mainly due to concerns that the company won’t be able to escape the negative impact of global supply-chain disruptions and higher costs going forward.

Is Tesla Stock A Buy After Its Q3 Earnings Beat?
 

Related Articles

Is Tesla Stock A Buy After Its Q3 Earnings Beat?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (14)
Bobby Sky
Bobby Sky Oct 28, 2021 5:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hi Haris
Anthony Bermudez
Anthony Bermudez Oct 23, 2021 6:59AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Mohd Izhar Muslim
Mohd Izhar Muslim Oct 23, 2021 12:15AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
it's that so, its gonna be ups to the brilliant suggestions for improvement.
Suraj Singh
Suraj Singh Oct 22, 2021 1:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jim Hernandez
Jim Hernandez Oct 22, 2021 1:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Haris missed this one big time. Same exact story, over and over again. Too high valuation which you CONTINUE to struggle with. In the mean time, investors are making money.
Kapil Baldawa
Kapil Baldawa Oct 22, 2021 1:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Even if you annualize their best performance after the fudged n so many tax n green credits.. it comes out to $7.9 and it's only trading at 111x fwd.. competition will go up n demand will distribute.. $200 is more than rich valuation for this nothing spl about it company
mohamed alhajri
mohamed alhajri Oct 22, 2021 1:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yeah its always a buy
동희 심
동희 심 Oct 22, 2021 10:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You have been always wrong!!!
동희 심
동희 심 Oct 22, 2021 10:02AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Even if many sparrows chirp to produce FUDs about TESLA, the phoenix(tesla stock) ascends to heaven to converge the value of TESLA!!!
Ron Love
Ron Love Oct 22, 2021 8:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lmao, a 3.26% move yesterday = “failed to move the stock”?
ZM Qi
ZM Qi Oct 22, 2021 6:39AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
in Elon Musk, we trust
Gershom Zvi
Gershom Zvi Oct 22, 2021 6:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
No big rallies like in previous years but very slow mothion up and up ftom 0.3 - 1.5 % like conservative giant stocks
Zinzi Siswana
Zinzi Siswana Oct 22, 2021 5:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tesla is a buy … its going to reach $10k per share … there is no doubt about that
Heine Pedersen
Heine Pedersen Oct 22, 2021 4:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They have to work on the realiability of their cars. Or they are gonna have problems up against Asian and European EV makers... down the road
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email