Tesla Q4 Earnings Estimate

[Music] welcome to the tesla economist please hit the thumbs up and remember to subscribe you can follow me on twitter and talk to me on patreon it may feel like doom and gloom out on the markets at least until it doesn't right now everyone is trying to establish whether this is a dip or if this is the start of the market crash that will bring on the recession or will it just be a temporary market readjustment anyway the macro economy sure gets in the way of us trying to evaluate individual company successes i will go over what may happen to tesla in a down economy in more depth at a later stage but right now a lot of us want to know if we should be buying up more shares or options right now and take advantage of what may be another asymmetric investment we have the fact that this is starting to look more and more likely that these new factories will be online soon and we finally get to see 4680 batteries in production these will give the stock a great boost of course there are a lot of other events circulating tesla right now such as the semi tracks too but usually what the market cares about the most are the financials and what tesla's eps may be this quarter we're still weeks away from the results which may afford us enough time to really focus in on an accurate prediction and what we think this may be and then this could help us with the conviction we need in order to take advantage of this opportunity i also wanted to work this out too as i have quite a few options right now riding on this therefore i'm going to start working on my financial estimates now i'll do a base case bear case and bull case hopefully it will become a collaborative effort over this time so together we can really get a good idea of what to expect also more information will come to light over the month namely china production numbers for december all we have at this stage is a very impressive domestic china sales number but there may have also been exports in addition to that it is possible that tesla did decide to keep a lot of these sales domestic as the ev subsidies in china are reducing so tesla may have wanted to get as many out to the chinese consumers as possible before this occurred in other words the ccp are doing less to support their local ev industry i mentioned that potentially we saw some increases in the fremont factories due to this number which was promising but if tesla have 10 000 exports from china in december as well then that pretty much rules out the fremont growth in my opinion this is not a bad thing it's quite the opposite as it indicates that tesla is simply at an even higher production rate in shanghai than we thought it's not so much about how many more units tesla can generate out of fremont but more about the potential of their new factories and right now giga shanghai model y factory is the leading indicator not only that it is now being reported that the new catl factory is already delivering batteries to tesla in shanghai tesla is still battery constrained more than anything else until we have more word from china we'll go over the numbers being that tesla have sold all their chinese production in december domestically although i think this may be unlikely but we should receive some more numbers very soon and we can keep updating this q4 estimate over the month let's get started let's plug in our delivery numbers now we finally have them remember delivery numbers are what the market care about the most instead of production numbers because they will be what will affect the eps we can also compare q4 deliveries to q3 oh right yeah we had 67 000 more deliveries quarter over quarter that is absolutely outstanding but this may not be enough to give us the conviction we need to realize tesla is on sale so let's see what impact a 28 increase in deliveries has on profits now for those of you who've seen how i do this in the past you'll be familiar with what i do i've tried various processes but this process always seems to get me the most accurate results i simply add the extra potential sales revenue of the quarter on from the previous quarter now we need to work out the average selling prices the price of the model s was initially 119 000 but was quickly raised to 129 000 once tesla realized just how popular the world's quickest car will be the 119 000 orders may have been even fulfilled now implying the average price may have increased there would also model x sales here too though and the model x plaid is 119 000. although as you probably heard tests are now only offering the six-seat configuration which is the most expensive this would imply the demand for the x is also strong i'm going to place an asp of 125 000 for the s and x for now now we've had a pretty substantial price rise for the model 3 standard range in fremont over october and november from forty thousand dollars to forty five thousand dollars and on top of that a saving in the cost of approximately three thousand dollars per vehicle moving to lfp batteries however these price rises will not be felt in the q4 earnings as these orders were executed earlier due to the waiting lists therefore we're going to keep the same forty thousand dollar price tag for the standard range the only model three price increase we'll notice this quarter will be the long range increases from forty nine thousand to just fifty thousand next quarter the price increases should have a good impact on margins but we won't notice them due to the initial lower margins from the new factories tesla always seem to be hiding the actual success of some sort of event for example imagine how much more successful tesla would have been this year if we'd had the s and x lines running continually we would have been very close to a million units just from shanghai and fremont now due to such a long waiting list for the model y from fremont we're still not going to be feeling the major price rises we've been seeing however some people have been reporting that they've received their model y earlier than expected too i'm going to increase the long range to 53 and a half thousand dollars the performance version only had price rises towards the end of the year wow tester really had been raising their prices a lot towards the end of this year okay on to shanghai we had a price rise for the model 3 standard range from 236 000 yuan to 250 000 yuan the performance price remained the same as for the model y well the standard edition increased almost 10 from 276 000 yuan to 301 000 the performance edition also had a slight price increase okay i'm happy with our new average prices this gives us an increase in automotive revenue of 3.37 billion dollars there's also some minor increases in fsd revenue too there could be some fsd deferred revenue released as well but in this scenario we'll leave that out this may even be likely now we've just heard that tesla raising the prices of fsd from 10 dollars to twelve thousand dollars this takes total auto revenue to slightly over fifteen billion dollars already up twenty nine percent from q3 there is likely some regulatory credits to come through too at possibly around 250 million dollars wow that figure is looking very small now relative to revenue considering how much tesla has grown recently regulatory credits are dwindling though mainly since fiat cries the merge with stalantis and more manufacturers are making compliance cars a way for legacy to justify their losses with their evs okay now we move on to the all-important profit margins in q3 we had a mind-blowing 30.5 percent gross margin however as we've just seen prices have risen since although we're not feeling the full prices increases yet there'll still be some improvement the model s and x line is more ramped up which are likely higher margin vehicles but they are in low quantities and we have lfp batteries being used in the model 3 standard range we also have a lot of the majority of this jump in deliveries likely attributed to more model wires coming out of shanghai which are going to have a much better margin than fremont vehicles i think 32 percent gross margin is reasonable although i think it may even be higher and we can run some more scenarios in other videos later we have a lot of vehicles increasing 10 in price so an increase in margins this high is possible not to mention some cost reductions and further ramping of more profitable vehicles this takes auto gross profit to over 5 billion dollars up 35 from q3 that is a huge jump it's difficult to predict energy and services but they're not overly relevant as they just about break even so either way they have very little impact on earnings at this stage i'm just going to keep them as they were last quarter as it's just guessing now we move on to opecs i'm increasing both r d and selling general and admin as bitcoin has not hit new lows since purchased then we will not be seeing any bitcoin losses in restructuring now there is a possibility that the master of coin actually sold some bitcoin which could potentially show in restructuring although it in no way reflects the success of the business it will still add to the earnings and thus potentially boost the stock a little now we get to operating income of 3.2 billion dollars incidentally that is an 18.5 operating margin q3 was impressive enough when we hit 14.6 the operating income is also an improvement of 59 from q3 this gives us an income before tax of 3.1 billion dollars now that is a 65 increase from q3 i think the tax rate might start to get higher as profits are starting to grow substantially higher than the likes of depreciation to offset the tax when we adjust for that this brings us to a net income of 2.7 billion dollars this then brings us to the total number that wall street really cares about the gap diluted eps which i have at 2 53 cents the thing is this is up an impressive 75 percent from q3 this is an absolutely giant jump in earnings the financials are the main fundamentals the market looks at for valuation purposes if you recall in q3 when the financials came out we went from a stock price in the 700s to over 1200. anyway if this was annualized it would give an annual net profit of 10.8 billion dollars which at the stock price at the time of this video would mean we're at an annualized p e ratio of below 100. now given that tesla's total vehicle capacity is likely to quadruple in the near future costs are going to come down and prices still seem to be rising do you think a p e ratio of 100 is reasonable bear in mind we just witnessed an increase in 28 deliveries equated to an increase in eps of 75 what will an increase of 300 in deliveries equate to in eps sure it may take a couple of years but i can wait now i really want all your feedback on what you think of these numbers and in the next video i'll take that on board and we'll start running various scenarios on these numbers i think our aim should be to get a really close range of what the profit could be like within a bull case and bear case scenarios thanks for listening please hit the thumbs up and subscribe you can follow me on twitter and talk to me on patreon

Channel: Tesla Economist

Views: 24,244

Keywords: tesla, tsla, tesla stock, elon musk, tesla cars, tesla investing, tesla shares, q4 earnings estimate

Id: 1VKKGipf7yU

Length: 10min 31sec (631 seconds)

Published: Sat Jan 08 2022