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Tesla (NASDAQ:TSLA) stock is jumping 10% this morning after the electrical vehicle (EV) maker reported stronger-than-expected fourth-quarter results yesterday.
Along with upbeat comments by management, earnings showed that Wall Street’s recent concerns about waning demand have been unwarranted. What’s more, Tesla’s strong results and outlook indicated that worries concerning the economy’s health and the spending power of upper-end consumers could also be way overdone.
Here’s what investors should know following the corporate’s Q4 report.
TSLA Stock and the Q4 Results
Tesla reported Q4 earnings per share (EPS), excluding certain items, of $1.19. That got here in well above the analyst average outlook of $1.13. On the highest line, sales got here in at $24.32 billion as well, narrowly beating the mean estimate of $24.16 billion. In Q4 2021, Tesla generated EPS of 85 cents and sales of $17.72 billion.
For the period, the corporate’s EBITDA also jumped 32% year-over-year (YOY) to $5.4 billion. Meanwhile, Tesla’s net income attributable to shareholders soared 59% YOY to $3.7 billion as well.
On a negative note, within the wake of Tesla’s recent price cuts, the corporate’s EBITDA margin did drop barely, inching down nearly a percentage point YOY. Alternatively, nevertheless, its operating margin rose 1.3 percentage points YOY to 16%.
Overall, the Q4 data shows that Tesla’s sales growth and profitability remain extremely strong despite price cuts.
Positive Comments From Management
That’s not the one news for TSLA stock investors to take from the report, nevertheless. Addressing the demand issue head on, CEO Elon Musk said the next throughout the earnings call:
“To this point in January, we’ve seen the strongest orders year-to-date than ever in our history. We currently are seeing orders at almost twice the speed of production.”
Saying that “demand might be good” going forward, Musk explained that Tesla’s price reductions have enabled many more consumers to purchase its EVs. The CEO also noted that the corporate’s costs are dropping because production rates at its Berlin and Austin, Texas factories have surged. “Demand far exceeds production, and we actually are making some small price increases in consequence,” he noted.
Meanwhile, CFO Zachary Kirkhorn indicated that Tesla cut prices within the U.S. partially to make more of its EVs eligible for brand new EV tax credits.
What to Watch Going Forward
As 2023 continues, investors who own TSLA stock or are considering of taking a position should keep watch over indications of EV demand for the corporate and Tesla’s ability to supply vehicles. Also pertinent are its technological innovations, the stock’s valuation, the efforts of Tesla’s competition and, in fact, the corporate’s quarterly production and delivery data.
On the date of publication, Larry Ramer didn’t hold (either directly or not directly) any positions within the securities mentioned in this text. The opinions expressed in this text are those of the author, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Amongst his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You’ll be able to reach him on Stocktwits at @larryramer.
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