Tesla Inc on Wednesday reported another quarter of earnings growth, but shares fell amid questions over the resilience of electric vehicle (EV) demand and CEO Elon Musk’s embattled Twitter Inc transaction, among other issues.
The EV maker more than doubled profits in the third quarter to US$3.3 billion on increased auto deliveries.
However, shares retreated more than 6 percent to US$208.16 in after-hours trading after the company reported revenues of US$21.5 billion, a 56 percent increase over the same period last year, but about US$500 million below analyst forecasts.
The company flagged battery supply-chain bottlenecks as a constraint on EV growth, adding that logistics volatility was an “improving” challenge.
“Knock on wood, it looks like we’ll have an epic end-of-year,” Musk said during an earnings call. “The factories are running at full speed and we’re delivering every call we make.”
The results follow Tesla’s disclosure earlier this month that deliveries and production grew solidly in the third quarter after diving in the prior period due to a factory closure at the company’s Shanghai plant during a COVID-19 outbreak.
The automaker has avoided setting specific annual delivery targets, but analysts have benchmarked a target of about 1.4 million for all of this year.
Tesla is on pace for a 50 percent increase in production this year, but could fall shy of that goal when it comes to getting the vehicles to buyers, chief financial officer Zach Kirkhorn said on the call.
Tesla is working on smoothing out a “crazy delivery wave” at the end of each quarter, Musk told analysts.
“There weren’t enough boats, there weren’t enough trains, there weren’t enough car carriers to actually support the wave, because it got too big,” Musk said.
Tesla watchers are expecting a strong fourth quarter with a restored Shanghai factory and the ramp-up of plants in Texas and Germany.
However, COVID-19 remains a wild card in light of China’s continued adherence to its zero-tolerance approach to fighting the virus. Another question concerns whether Musk’s company would remain immune to macroeconomic concerns, especially inflation.
Tesla shares have dropped more than 16 percent since Sept. 30, shortly before the company released its third-quarter delivery figures, and ahead of Musk’s Oct. 4 revival of his bid to acquire Twitter and head off a trial in which he was being sued by the company for breach of contract.
In the most recent move in the takeover saga, a Delaware judge suspended litigation between the parties to allow time to finalize the US$44 billion transaction.
However, the judge has said that if the deal does not close by Oct. 28, the trial could be rescheduled for next month.
“I’m excited about the Twitter situation,” Musk said during the earnings call.
“I think it’s an asset that has just sort of languished for a long time, but has incredible potential, although obviously myself and the other investors are overpaying for Twitter right now,” he said.
“Despite Elon Musk’s Twitter distractions, Tesla has been fixated on identifying and mitigating disruptive themes in the automotive sector,” GlobalData PLC analyst Daniel Clarke said.
However, he also said that reliance on the Chinese market is potentially a massive “bump in the road” for Tesla as geopolitical rivalry with the US increases.
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