Elon Musk has sought to brush off Wall Street’s worries that demand for Tesla’s electric vehicles is dwindling in the face of a weakening economy and increasing competition from other automakers. although he admits the conditions are “a little harder than they have”.
His comments on Wednesday, which included a strong indication that the electric carmaker will execute its first stock buyback program next year, came as Tesla revealed that its revenue fell unexpectedly in its latest quarter as it struggled to deliver vehicles to customers because of shipping issues.
Earnings per share of $1.05 beat market forecasts of 99 cents, thanks in part to higher selling prices and lower taxes and fees.
The news sent Tesla shares down more than 6% in post-market trading. Since the company this month reveal a deficiency During the quarter’s new-vehicle deliveries, the stock fell nearly 20%.
Talk to analysts, Musk try to lie down worrying about the need to rest. “I cannot stress enough that we have a great need for [the fourth quarter] and we hope to sell all the cars we can in the future,” he said.
However, he warned that deflationary forces in the economy were gathering strength, with China and Europe experiencing “an economic downturn”, leaving demand below average. often.
Musk also responded to Wall Street’s growing speculation about potential stock buybacks, saying the company’s board “generally believes that the buyback is justified” and the program’s worth $5 billion – $10 billion is “probable”, even if conditions deteriorate and 2023 turns into a “very difficult year”.
News of a potentially major acquisition comes just three years after Tesla faced persistent bankruptcy rumors. Its free cash flow hit a record $3.3 billion in the latest quarter, bringing its net cash to $19.1 billion.
In the most recent quarter, revenue grew to $21.45 billion, 56% higher than the year before. Wall Street was expecting revenue of just under $22 billion.
Tesla was able to keep its gross margin from its closely watched auto operation at 27.9%, the same as it was three months earlier, even though it was down 2.5 percentage points year over year. struggling with new factory costs.
The company has been blamed for failing to meet ambitious delivery targets this year due to a range of operational challenges ranging from Covid related to stop production in China supply chain pressure. However, analysts have begun to warn of a potential drop in demand.
The latest challenge comes from the difficulty of transporting a large number of vehicles at the end of each quarter. One-third of its deliveries in the third quarter came in the last two weeks of September, the company said.
“There aren’t enough boats, there aren’t enough trains, there aren’t enough people to transport cars. Tesla was too big,” Musk said.
The company doesn’t forecast how many vehicles it will deliver in the final months of the year, although many analysts have slashed their full-year sales forecasts.
At the beginning of the year, Musk predicts Tesla deliveries will “comfortably” surpass the average annual growth target of 50%, even though supply chain problems have piled up.
To hit that target after recent shortages, delivery numbers would have to reach nearly 500,000 in the final three months of this year, 45% more than the previous record quarterly delivery figure.