Elon Musk addresses Twitter takeover, possible recession on Tesla earnings call

 

Elon Musk addresses Twitter takeover, possible recession on Tesla earnings call

After the bell, Tesla released its third-quarter financial results. During the earnings call, management addressed a wide variety of issues, including macroeconomic worries and CEO Elon Musk's impending takeover of Twitter.

Following the results, shares dropped by nearly 5% after business hours.

These are the outcomes.

According to Refinitiv's survey of analysts, earnings were $1.05 vs the adjusted expectation of 99 cents per share.

Revenue: $21.45 billion vs Refinitiv's expectation of $21.96 billion.

Tesla's net income (GAAP) for the third quarter of 2022 was $3.33 billion, with automotive gross margins remaining constant at 27.9%, the same level as the first quarter of 2022. Tesla reported $1.62 billion in earnings for the same time period in 2017.

Musk addressed queries from shareholders on the demand for electric vehicles and a potential share repurchase during an earnings call on Wednesday to discuss the results.

I can't stress this enough, but we anticipate selling every car we produce for as long as we can imagine. We have tremendous demand for Q4. "The plants are functioning at full capacity, we are delivering every car we build, and maintaining healthy operating margins."

According to him, Tesla would most likely do a "major repurchase" in 2019 that may cost between $5 billion and $10 billion, subject to board approval.

Optimistically, he added, "I think we can well outpace Apple's present market cap. In fact, I foresee a scenario in which Tesla's value surpasses that of Apple and Saudi Aramco put together. That does not imply that it will occur or be simple.

Tesla executives were questioned by shareholders on macroeconomic factors affecting their operations in and outside of China.

According to Musk, "China is facing a type of recession" mostly in the real estate sector, and "Europe has a sort of recession driven by energy." Although the Fed is raising interest rates more than they should, he continued, "North America is in very excellent shape, and I think they'll soon understand that and bring them down again."

Musk also discussed his upcoming purchase of Twitter in answer to a separate question, adding, "I think it's an asset that has sort of languished for a long time but has amazing potential." Later on, he continued, "Twitter's long-term potential is orders of magnitude more than its current worth."

In order to raise money for the completion of that $44 billion take-private deal, Musk is anticipated to sell a portion of his enormous Tesla stock.

In its shareholder presentation on Wednesday, Tesla reaffirmed its prior forecast, stating: "Over a multi-year period, we anticipate reaching a 50% annual increase in car deliveries."

The business stated that it is manufacturing the Semi in Nevada, where it already manufactures battery packs for its US-built cars. The company maintained that deliveries of its Semi electric heavy-duty truck will start in December. The Semi was initially introduced in December 2017.

Tesla said only that it would be built in Texas after the ramp-up of Model Y manufacturing there and did not provide a precise launch date for the Cybertruck pickup.

Despite an increase in car production and delivery, servicing has lagged behind and has been a source of dissatisfaction for many Tesla customers.

In July, CEO Elon Musk expressed his excitement about working with Tesla Servicing to provide same-hour service as frequently as possible. Teslas using pit crew tactics from Formula 1

However, Tesla only added 41 more sites compared to the second quarter of 2022, a 6% growth in retail and service center locations. However, it increased the number of mobile service trucks in its fleet, which is driven by service professionals to fix customers' automobiles locally when feasible. Tesla reported running 728 stores and service facilities as of the third quarter.

Services and other income, which includes charges for customers using Tesla Supercharging stations to charge their cars, sales of products bearing the Tesla logo, and repairs for customers' vehicles outside of warranty, increased to $1.65 billion.

In its publication of financial results for the third quarter, the firm stated that it was "transitioning to a smoother delivery pace" and cautioned of a transportation capacity bottleneck for new car deliveries in the closing weeks of the quarter.

For the quarter, the energy division of Tesla made $1.12 billion in revenue. This branch installs solar roofs and offers backup batteries for home, business, and utility usage.