Tesla Q3, 2021 Earnings Are Coming - What To Expect
Tesla Earnings for Q3, 2021 Coming Soon
Tesla will have their earnings call on Wednesday, October 20th, 2021. What can we expect from this earnings call? Tesla's stock has recently been on a tear, now in positive territory for the year and over 10% year to date. Is Tesla overvalued or undervalued? Let's find out!
What to Expect In Q3, 2021
Let's take what we know about Tesla and see what applies to its 3rd quarter earnings.
- Tesla continues to sell more and more Model S Plaid vehicles at high margin.
- Tesla is continuing to ramp up Giga Shanghai and Giga Fremont, CA
- Tesla has increased prices which will increase revenue and margins
- Tesla is delivering more Model Y vehicles
- The standard range Model Y has been selling well in China
- FSD subscription revenue is now being realized
We also know that Tesla continues to improve its manufacturing. Tesla's biggest advantage is manufacturing, according to Elon Musk. Therefore, we can expect cost savings related to these efficiencies:
The total number of vehicles Tesla is delivering is increasing, which will increase overall revenue and profit margin.
Tesla removed radar in May and will see benefit from not having that installed on newer vehicles.
Tesla will hit about $170 million in stock based compensation for Elon Musk.
What Will the Earnings Numbers Be?
Let's put it all together now and create a line item list of what we believe Tesla will achieve in its Q3, 2021 earnings call. This is in a format that will match exactly what Tesla will report in their investor slideshow:
Automotive Revenues: $12.247 billion
of which regulatory credits: $300 million
Automotive gross profit: $3.479 billion
Automotive gross margin: 29.5%
Total revenue: $14.35 billion
Total gross profit: $3.46 billion
Total GAAP gross margin: 25%
Operating expenses: $1.88 billion
Income from operations: $1.57 billion
Operating margin: 11.5%
Shares Stock Diluted: 1.2 billion
Net income (GAAP): $1.82 billion
Net income (non-GAAP): $2.18 billion
EPS, diluted (GAAP): $1.70
EPS, diluted (non-GAAP) $2.05
Adjusted EBITDA: $2.98 billion
Net cash operating activities: $2.55 billion
Capital expenditures: $1.8 billion
Free cash flow: $743 million
Cash and cash equivalents: $19.9 billion
How did we come to these numbers? We took the positive catalysts and did a percentage increase from Q2, 2021. We also know that regulatory credits will decline over time and are accounting for that.
One thing we may be missing is a tax-deferred loss that Tesla decides to realize. If this happens, E.P.S. GAAP will be more than what we've estimated.
If Tesla achieves these numbers, at an $818 stock price, the Price Earnings Ratio (P/E) will become: 244, with a now 3.35 trailing twelve months E.P.S. GAAP, instead of 1.92, almost halving the P/E from 447 that it is today... In just ONE QUARTER. Wow...
Something To Ponder For the Future
We think Tesla stock will continue to go up in value so long as it keeps having record quarters and the P/E ratio continues to decline. Now, here's something to ponder for the future.
It is the year 2035. Tesla has continued to grow at the pace it does now (at about 70%) with innovation, cost reduction, efficiency improvements, new vehicles, Tesla Bot, and artificial general intelligence. It will have these key metrics:
Trailing Twelve Months E.P.S. GAAP: $53,289.79
At a Price Earnings Ratio of 30, Stock Price: $1,598,693.56
You read that correctly. If Tesla continues to grow at the current rate they are with revenue and earnings, which shows no sign of slowing down, the stock price in December of 2035 could be over $1.5 million dollars per share.
This sounds ridiculous, so I put Tesla's growth at only 60% until 2035 and I came up with these values:
Trailing Twelve Months E.P.S. GAAP: $16,088.90
At a Price Earnings Ratio of 30, Stock Price: $482,667.15
What do you think about Tesla's upcoming Q3, 2021 earnings call? Will they beat expectations? Are there any surprises we may have missed?
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter, Facebook, LinkedIn and Instagram to stay in touch and follow his Tesla news coverage on Torque News.