Tesla Slips After-Hours Despite Beating Q3 Expectations

Shares of the global electric vehicle (EV) maker Tesla, Inc. (TSLA) slipped 1.6% in the extended trading session on October 20 after the company delivered robust third-quarter earnings and revenue. Despite ongoing supply chain challenges, chip shortages, and transportation difficulties, Tesla continued to run at almost full production capacity to sustain the growing demand for its vehicles.  

The company reported earnings of $1.86 per share, up a whopping 145% year-over-year, and significantly beat analyst estimates of $1.58 per share. (See Insiders’ Hot Stocks on TipRanks)

Further, total revenue came in at $13.76 billion, an increase of 57% compared to the year-ago period, and also surpassed Street estimates of $13.62 billion. Revenue growth was attributed to higher vehicle deliveries, especially for lower average selling price (ASP) vehicles, which were a larger part of the delivery mix. Tesla sold a record 241,391 vehicles in the third quarter, reflecting 73% year-over-year growth.

Commenting on the results, Zachary J. Kirkhorn, CFO of Tesla, said, “A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed. We believe our supply chain, engineering, and production teams have been dealing with these global challenges with ingenuity, agility, and flexibility that is unparalleled in the automotive industry.”

In response to Tesla’s solid Q3 performance, Mizuho Securities analyst Vijay Rakesh lifted the price target on the stock to $950 (9.7% upside potential) from $825 while maintaining a Buy rating.

Rakesh said, “We believe TSLA has fared better than others on the auto chip shortages by potentially designing out of constrained parts, and should see a tailwind for 2022 vehicle shipments in addition to ramps at Berlin/Austin factories. We believe TSLA continues to target a 50% unit delivery CAGR over the next few years, with our 2021E/2022E revenue growth estimates up 62%/30% y/y.”

The analyst believes the EV market is poised to grow at a 30% CAGR from 2020 to 2030 globally and that Tesla is well-positioned to lead the market.

Overall, the stock has a Hold consensus rating based on 12 Buys, 7 Holds, and 7 Sells. The average Tesla price target of $710.52 implies 18% downside potential to current levels. Shares have exploded 104.9% over the past year.

Additionally, according to TipRanks’ Smart Score system, Tesla gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.

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