Tesla Q1 EPS Up by 250%, Shares Gain Over 7%

Tesla (NASDAQ: TSLA) shares jumped over 7% during the extended trading session on April 20, after the electric vehicle manufacturer delivered a blowout first-quarter results, significantly topping both earnings and revenue estimates.

The quarterly beat was driven by robust growth in electric vehicle (EV) deliveries, higher pricing, and reduced costs, which successfully offset inflationary pressures, rising input costs, and supply chain challenges.

Q1 Outperformance

Impressively, quarterly earnings more than trebled year-over-year to $3.22 per share and significantly beat analysts’ estimates of $2.26 per share. The company reported earnings of $0.93 per share for the prior-year period.

Additionally, revenue climbed a whopping 81% to $18.8 billion compared to the prior-year period and outpaced the Street’s estimate of $17.8 billion.

The outstanding revenue growth is attributed to the higher average selling price (ASP), coupled with growth in vehicle deliveries and growth in other parts of the business.

On top of that, operating margin improved massively, hitting 19.2% compared to only 5.7% in the year-ago period. The improved operating margin was driven by lower cost of goods sold (COGS) per vehicle despite inflationary pressures, lower stock-based compensation expense, as well as an increase in regulatory credit sales, offsetting rising raw material and other operating expenses.

In Q1, Tesla delivered 310,048 vehicles, up 68% year-over-year, including 14,724 Model S/X deliveries and 295,324 Model 3/Y deliveries.

Management Commentary

Management noted that supply chain constraints and chip shortages continue, and are further heightened by the recent COVID-19.

Raw material prices have increased manifold, and the company has adjusted the pricing of its products with a continued focus on reducing manufacturing costs.

Wall Street’s Take

Following the outstanding Q1 beat, RBC Capital analyst Joseph Spak increased the price target on Tesla to $1,175.00 from $1,035 and reiterated a Hold rating.

The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 15 Buys and five Holds. The average Tesla price target of $1,011.64 implies 3.5% upside potential to current levels.

Conclusion

It is immensely commendable that Tesla has been able to post record deliveries and superior earnings while its peers struggle to cope with the supply chain issues and other macro risks affecting their profitability.

The EV maker has got the right strategies to sail through the storm. Higher prices have certainly helped the company hedge against the growing inflation and the resulting cost increases.

Likewise, shares have risen over 30% over the past year, reflecting the company’s outperformance versus peers and benchmarks alike.

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