Why didn’t Tesla’s share price rise but fall instead of rise?


Tencent technology news on October 21, electric vehicle manufacturer Tesla announced impressive third quarter results after the stock market opened on Wednesday, showing that its net profit and earnings per share exceeded Wall Street’s expectations and met investors’ rising expectations. However, after the financial report was released, Tesla’s share price fell instead of rising.
Tesla shares fell 0.9% in after hours trading after closing up about 0.1% in regular trading on Wednesday. Both the standard & Poor’s 500 index and the Dow Jones industrial average rose about 0.4%.
Tesla announced earnings per share of $1.86 and revenue of about $13.8 billion, higher than Wall Street’s expectation of about $1.67, but lower than the revenue expectation of $13.9 billion. Tesla’s net profit hit a new record, better than expected, but in recent weeks, after Tesla announced stronger than expected third quarter delivery on October 2, analysts’ expectations have always been rising, up about $0.2 per share.
Tesla delivered about 241000 vehicles, 10000 to 15000 more than analysts predicted. More importantly, although the shortage of Semiconductors Limited global automobile production, Tesla managed to deliver about 40000 more vehicles than in the second quarter of 2021.
Tesla’s strong delivery data has boosted the stock. From then until Wednesday, the company’s share price rose about 12%. The Nasdaq composite index rose about 4% over the same period. Tesla’s share price has risen 31% in the past three months.
The plight of semiconductors and supply chains has led to rising costs for all carmakers. However, Tesla’s overall gross margin is close to 27%, higher than 24% in the second quarter of 2021. The gross profit margin of cars reached 30.5%, although the company received less cash from carbon point sales. The increase in the output of existing factories is a major reason for improving the profit margin.
Carbon point sales has always been a topic of discussion among investors. Tesla was able to sell carbon credits because it produced zero emission vehicles that exceeded its fair share. Over the past three years, Tesla’s total sales of carbon credits have reached US $3.4 billion. Sales in the third quarter were $279 million, the lowest level since the fourth quarter of 2019.
However, the decline in carbon score sales did not prevent Tesla from announcing record quarterly operating profits again. The company’s operating profit exceeded $2 billion for the first time, higher than the $1.3 billion announced in the second quarter.
Overall, Tesla’s third quarter results look bright enough to keep the share price flat. Bulls may want to hit a new high, eclipsing the $900.40 hit in January, but it may take longer to see the share price rise to this level.
Tesla management sounds satisfied with the profit margin, but warns investors that the profit margin may not continue to increase in the case of increased production at the new plant. Tesla is expected to start production at its new Texas and Berlin plants in 2021 and will begin delivering products to customers soon thereafter. This is in line with current investor expectations.
Finally, investors are increasingly concerned about the increasingly stringent regulatory review of driver assisted driving systems. Tesla’s management sounded optimistic, saying that Tesla has been working with regulators and will continue to do so as the assisted driving system becomes more complex. (reviewed by Tencent technology / Jinlu)