Yingwei Financial Investing.com – For Tesla’s (NASDAQ: ) “fanatics”, the company’s recent earnings report doesn’t seem like much to worry about — the world‘s largest electric-car maker is still creating something traditional automakers can’t match. growth and profit margins.
For some Tesla watchers, however, there were still plenty of disappointments in the company’s earnings report, especially in the subsequent conference call with Tesla CEO Elon Musk.
Although the electric car company’s third-quarter sales rose 56% to $21.5 billion, it missed analysts’ average estimate of $22.5 billion. However, there are signs that the rising cost of doing business is starting to show in the company’s gross margin, which narrowed to 27.9% in the quarter, missing analysts’ average estimate of 28.4%.
In addition to the data, Tesla has failed to convince Wall Street analysts that the company will not be hurt by weak demand in an environment of soaring interest rates and a looming global recession. Musk told analysts that while he expects Tesla’s numbers to continue to be strong at the end of the year, the downturn in Europe and some other regions has been weighing on orders. The CEO added that in the current situation, demand performance is not optimistic.
Uncertainty over the demand outlook, coupled with Musk’s operational missteps on Twitter’s (NYSE: ) trade, is weighing on Tesla’s stock price negatively. They have lost about a third of their value in the past month.
Analysts were divided on the company’s near-term outlook following the earnings release and Musk’s conference call.
Among them, although Morgan Stanley reiterated its overweight rating on Tesla shares and believed that “the company’s quarterly performance was very strong,” it still said, “As the company responds to inflationary pressures, its earnings this year are expected to be less than expected.”
Elsewhere, Bernstein rated Tesla as “underperform,” and senior research analyst Toni Sacconaghi said he didn’t get much meaningful information from Tesla’s conference call. On the earnings call, the answers to many of the questions were short and dismissive, and CEO Elon Musk repeatedly made very bold predictions about the company’s future and capabilities.”
Toni Sacconaghi set Tesla’s 12-month price target at $150, which means that Tesla may still have room for a downside of about 30%. It said in the report, “The lead time of electric vehicles has shortened significantly, and we are concerned about weaker consumer spending and increased competition. Moreover, Tesla’s squeeze orders fell in the quarter, indicating that orders are lagging behind the current production pace. “
InvestingPro’s model suggests that Tesla’s share price is currently close to fair value, meaning that Tesla’s share price has some upside potential after falling sharply over the past month – the current average fair value is $247.83, meaning The market outlook may have a 17% upside potential.
(TSLA fair value estimates from InvestingPro)
Summarize
Tesla investors may find the current bearishness difficult to break after the third-quarter earnings report. While the numbers weren’t all disappointing, it left the market wondering whether the company was really immune to macro headwinds. In this environment, staying on the sidelines and waiting for a better entry point seems to be the better option.
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(Translation: Li Shanwen)