Tesla’s (TSLA) Earnings Report Sparks Mixed Reactions Among Analysts

Despite Tesla, Inc. (TSLA) announcing record profits and delivery numbers, investor enthusiasm appeared muted. The stock, which had been gradually rising ahead of the earnings call, dropped sharply by up to 5% afterward. On January 27, 2022, the decline continued, closing the day down 11.55% at $829.10, as concerns about ongoing supply chain disruptions impacting production weighed on market sentiment.

Highlights

• Tesla posted its highest-ever earnings and profits for Q4 2021, yet its share price declined significantly.
• Analysts remain cautious about Tesla’s growth potential this year, citing past performance, delayed product launches, and supply chain hurdles.
• Supporters view Tesla as a powerhouse in electric vehicles with a potential market value reaching $5 trillion.

As the world’s most valuable automaker, Tesla’s stock commands a high earnings multiple, fueled by retail investor enthusiasm during the pandemic and government policies favoring electric vehicles. However, since the beginning of 2022, Tesla shares have fallen approximately 28%, prompting debates about whether a market correction is underway.

The company continues to polarize opinion, with analysts split on the implications of its latest earnings report.

Conflicting Analyst Perspectives

Evaluating Tesla’s outlook is complicated by shifting timelines for upcoming product releases. CEO Elon Musk indicated a focus on current vehicle models rather than launching new ones like the Cybertruck or Semi this year. Simultaneously, he revealed efforts on a humanoid robot for factory work and highlighted ongoing beta testing of Full Self-Driving (FSD) technology.

Bernstein Research analyst Toni Sacconaghi, who rates Tesla as underperform, questioned the feasibility of reaching 3 million vehicle sales by 2024 without a $25,000 model. Musk, however, emphasized the underestimated profit potential of FSD technology.

Morningstar’s Seth Goldstein maintained a $700 price target, citing expected near-term cost increases from raw materials and the launch of new factories in Austin and Berlin.

Piper Sandler’s Alexander Potter noted that Q4 results were not flawless, pointing to supply chain challenges inflating logistics expenses and slowing new product introductions. Despite this, he upheld his Buy rating and $1,300 price target.

Morgan Stanley’s Adam Jonas took a bullish stance, describing Tesla as an “EV cash machine” with the highest gross margins (29%) among automakers and a growing free cash flow yield. He also set a $1,300 price target.

Wedbush Securities analyst Dan Ives called the quarterly results “stellar” and viewed the stock’s price drop as a temporary overreaction, emphasizing Tesla’s role in a $5 trillion green energy revolution.

Wells Fargo’s Colin Langan holds a Hold rating but raised his price target to $910 from $860 and increased his earnings per share estimate following the earnings call.

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