The share price of U.S. multinational electric vehicle company Tesla is falling as the company’s third-quarter revenue missed estimates. Tesla’s earnings per share (EPS) came in at $1.05, better than the 99 cents expected by analysts, according to reported results.
The company missed its revenue estimates, which came in at $21.45 billion, compared with $21.96 billion expected by analysts surveyed by Refinitiv. As the world’s largest electric car maker, the company reported that its net income (GAAP) for the third quarter of 2022 was $3.33 billion and its automotive gross margins were flat at 27.9 percent.
Despite inflationary pressures and the broader strain on the global economy, Tesla says it has very robust demand for the coming quarter.
“I cannot stress enough that we have excellent demand for the fourth quarter and expect to sell all the cars we make for as far into the future as possible“, said Elon Musk. “The factories are running at full capacity and we are delivering every car we make, while maintaining strong operating margins.“
During the company’s earnings conference call, Tesla revealed that it expects its production rate to grow by at least 50% to meet demand. However, the company gave a gloomy forecast for its delivery rate, which it said would fall below a 50% growth rate.
Tesla shares suppressed after announcement of revenue decline
The announcement did not impress investors and the company’s shares fell 6.65% on Thursday to close at $207.28. During the earnings conference call, Elon Musk expressed optimism that the company’s long-term valuation growth projection can exceed that of Apple and Saudi Arabian Oil.
“I believe we can far exceed Apple’s current market capitalization. In fact, I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. That doesn’t mean it will happen or that it will be easy” he said.
Elon Musk’s optimism, however, did not match that of Berstein technical analyst Toni Sacconaghi, who remained dissatisfied with Tesla’s performance and Musk’s disposition on the earnings conference call.
“Apart from the financial data, the earnings conference call did not satisfy us“, said Toni Sacconaghi, in a note published Thursday. “The answers to many questions on the earnings call were curt and almost dismissive, with CEO Musk instead repeatedly making very bold prognostications about Tesla’s future and capabilities.“
Toni Sacconaghi, is now bearish on Tesla over the long term and has maintained a 12-month price projection of $150 on the company’s stock. This bearish price target is about 30% below Tesla’s current share price, and if investors follow this projection, they could start shorting the company’s stock.