Tesla announced Wednesday its Q2 2022 Earnings Results reporting total revenue of $16.9 billion (up 42% year-over-year) and a 14.6% operating margin. Morgan Stanley analyst Adam Jonas issued a new note saying the results were “stronger than expected for revenues and margin” adding that China re-opening momentum and Austin/Berlin ram execution will have a key role in the upcoming months. The analyst reiterated the firm’s price target of $1,150.
“Tesla 2Q results were stronger than expected for revs and margin while we remain constructive on the stock and believe demand > supply… we are prepared for near-term margin headwinds due to (new) challenges with ramping new production, particularly in Berlin.”
“Likely direction of consensus? Up slightly but not a step change… Hard to see what really rocks the boat on consensus on Tesla until the company posts a more significant margin miss and/or we see evidence of new growth/margin profile from the ramp of Berlin and Austin. In the interim, we have a stock trading at approx 20x EBITDA and 35x our current FY25 forecasts… multiples that many auto investors are likely to find unacceptably high but tech investors may find attractive given the self-funding/positive FF and 30% to 40% EBITDA growth profile through end of decade,” the analyst wrote.
“What matters to the stock from here through year-end? (a) China re-opening momentum and (b) Austin/Berlin ramp execution, (c) input inflation vs. pricing actions and impact on margin,” he added.
The automaker said it expects to achieve ” 50% average annual growth in vehicle deliveries” confirming the previous guidance.
Tesla also detailed the production in each factory adding that it achieved “record production rates across the company”. However, the company warned of “continuation of manufacturing challenges related to shutdowns, global supply chain disruptions, labor shortages and logistics and other complications, which limited our ability to consistently run our factories at full capacity”.
“Thanks to strong production rate improvement towards the end of Q2, our team in Germany produced more than 1,000 Model Y vehicles in a single week, using 2170 cells. We expect the production rate to continue improving through the rest of the year”, Tesla concluded.