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This past Wednesday, the coast of Malibu was hit with a wave of earthquakes (considered one of which hit 4.2 on the Richter scale!). But California isn’t the one place getting rocked by earthquakes recently: The bottom is rumbling under the electrical vehicle (EV) industry following Tesla Inc.’s (TSLA) price cuts.
Initially of the 12 months, Tesla effectively sent a “kill shot” out to the whole automotive industry with its price cuts on its lower-priced models in each the U.S. and China. In reality, I noticed that as a result of Tesla’s price cuts, each Audi and Porsche dealers were desperate to sell their latest EVs and appeared to suddenly have sufficient inventory.
As we learned from Tesla’s fourth-quarter earnings report (released on Wednesday), future sales are expected to stay strong as a result of the recent European and U.S. price cuts.
The corporate also announced that the Tesla Cybertruck could be inbuilt Nevada, which inspired confidence of the corporate’s money flow and long-term prospects. I also needs to add that adjusted fourth-quarter earnings got here in at $4.1 billion, or $1.19 per share, which in comparison with $2.8 billion, or $0.85 per share, in the identical quarter a 12 months ago. Analysts expected adjusted earnings of $1.13 per share, so Tesla posted a 5.3% earnings surprise. Fourth-quarter revenue was $24.3 billion, just shy of estimates for $24.9 billion.
Tesla CEO Elon Musk also stated throughout the conference call:
Probably the most common query we’ve been getting from investors is about demand. Up to now – so I desired to put that concern to rest. Up to now in January, we’ve seen the strongest orders year-to-date than ever in our history… So I mean, it’s hard to say whether that can proceed twice that rate of production, however the orders are high.
His comments helped alleviate concerns about Tesla’s growth in the primary quarter. Fears about Tesla’s operating margins are also diminishing, but until its Shanghai plant reopens and its first-quarter results are announced, the corporate’s margins are anticipated to stay under compression.
In the long term, Tesla is facing more competition from Chinese EV firms as well as Ford Motor Company (F), Hyundai/Kia, Nissan and Volkswagen AG (VWAGY). Ford currently has the lead on pickups with the F-150 Lightening, while VW has the lead on vans with the ID.Buzz. Porsche is predicted to sell many Macan EVs in 2024 when it makes its top-selling SUV electric. Hyundai Motor is currently third in U.S. EV sales and is predicted to sell lots of the SUV EVs, as a result of its three way partnership with Kia.
The following interesting development within the EV world pertains to Tesla’s massive giga presses that it has installed in its latest factories in Austin, Texas, and Berlin, Germany. Essentially, the EVs from these factories have fewer body panels and must be more reliable.
But the true query is: Do these massive giga presses make manufacturing cheaper?
Virtually all major automakers make their vehicle bodies with robots that weld and glue body panels together, so I’m unsure that Tesla’s giga presses are a bonus, unless it helps vehicles age higher with less squeaks and rattles.
Following Tesla’s latest quarterly result, it is going to likely remain the EV leader for 2023; nevertheless, I imagine Ford will eventually slide into first place.
Earlier this month, Ford revealed that its sales of EVs surged to a brand new record high. The corporate sold 61,575 EVs in 2022, up 126% over 2021. The F-150 Lightning was the number-one electric truck within the U.S., with 15,617 Lightnings sold because it was introduced in May 2022. The corporate also sold 6,500 E-Transit vans and 39,458 Mustang Mach-E SUVs last 12 months.
Ford, though, is way from a one-trick pony – it actually has several horses in its stable, like the normal Mustang and the recent return of the Bronco, in addition to its top brands just like the F-150, which remained the top-selling tuck and best-selling overall vehicle in 2022.
Consequently, Ford has robust forecasted earnings and sales growth for the fourth quarter: The present consensus estimate calls for fourth-quarter earnings of $0.62 per share on $40.37 billion in sales, which represents 138.5% year-over-year earnings growth and 14.5% year-over-year sales growth.
Ford will release its fourth-quarter earnings results next Thursday, February 2, and I expect Wall Street will probably be very concerned with what company management has to say about Ford’s potential EV growth this 12 months. If it reports strong quarterly results and a positive outlook for the primary quarter, I believe we could see an analogous pop in Ford shares after its numbers are out.
With that said, because Ford currently holds a D-rating in Portfolio Grader, I wouldn’t recommend picking up shares of the corporate until after Wall Street has more insight on Ford’s earnings. As a substitute, I like to recommend specializing in investing in firms with superior fundamentals – which my Growth Investor Buy Lists stocks are chock-full of.
My average Growth Investor stock is characterised by 65.5% annual sales growth and 217.7% annual earnings growth. Up to now three months, the analyst community has revised their consensus earnings estimates up by a median 24.8%, so I’m expecting wave-after-wave of position quarterly announcements and positive forward-looking guidance.
I should add that I just beneficial three brand-new stocks in my Growth Investor Monthly Issue for February on Friday, in addition to my Top Stocks lists.
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Source: InvestorPlace unless otherwise noted
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