Tesla Q3 2022 Earnings Report: Revenue Hits $21.9B, Production Soars Amid Market Challenges

Focus on Tesla's Vehicle Production and Financial Growth

Key Highlights

• Adjusted EPS is projected at $1.01, a significant rise from 62 cents in Q3 2021.
• Vehicle production increased substantially, though growth pace slightly slowed compared to last year.
• Revenue is expected to accelerate both year-over-year and sequentially.

Tesla Inc. (TSLA), the world's leading automaker by market cap, is set to report Q3 2022 earnings amid a cooling global economy and persistent supply chain disruptions. Analysts anticipate a deceleration in year-over-year profit growth compared to the previous year.

According to Visible Alpha consensus estimates, Tesla’s adjusted earnings per share (EPS), excluding certain items, are expected to rise 63.2% year-over-year to $1.01. Meanwhile, revenue is forecasted to climb 58.9% to $21.9 billion. Notably, Tesla executed a 3-for-1 stock split in August 2022, impacting share metrics.

Automakers like Tesla have struggled recently to meet demand due to global shortages of essential manufacturing materials. The economic slowdown and recession concerns may dampen consumer demand, potentially leading to inventory backlogs. Tesla’s CEO Elon Musk has also been involved in a high-profile legal dispute with Twitter Inc., which has influenced Tesla’s stock through Musk’s sale and borrowing against company shares to finance the deal.

Investors received an early indicator on October 2, 2022, when Tesla announced quarterly vehicle production numbers. The company produced 365,923 vehicles in Q3 2022, surpassing analyst expectations of 363,300, but shipped only 343,830, suggesting a buildup in inventory.

After rallying in mid-2022, Tesla’s stock has recently declined sharply, erasing prior gains. Over the past year, Tesla shares have delivered a total return of -24.6%, underperforming the S&P 500’s -19.3% return as of October 17, 2022.

Tesla’s Earnings Trajectory

Tesla experienced rapid adjusted EPS growth through FY 2020 and FY 2021, with quarterly EPS more than doubling year-over-year in most quarters. This momentum slowed in Q4 2021, with a 56.9% increase, and analysts expect a further moderation for Q3 2022, though still an improvement from Q2.

Revenue growth has been steady but less explosive, rising year-over-year every quarter since FY 2020 except Q2 2020. Revenue growth peaked at 98.1% in Q2 2021 but slowed to 41.6% in Q2 2022. For Q3 2022, analysts predict a rebound to 58.9% growth, both sequentially and year-over-year.

Sources: Visible Alpha; Tesla Q3 FY 2022, Q3 FY 2021, and Q3 FY 2020 data.

Crucial Metric: Vehicle Production

Vehicle production remains Tesla’s core growth driver. Despite supply chain constraints and logistical challenges like securing affordable transportation for new vehicles, Tesla increased production by 53.9% year-over-year to 365,923 units in Q3 2022, exceeding analyst expectations. This marks a slight slowdown compared to the 64.0% growth in Q3 2021 but a strong sequential improvement over Q2 2022’s 25.3% increase.

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