What happened
Shares of electric car titan Tesla (TSLA 12.06%) braked hard Thursday morning, falling 7.1% through 11:30 a.m. ET. That sounds kind of crazy, seeing as Tesla just crushed on earnings last night, reporting $17.7 billion in sales, when Wall Street had only expected to see $16.4 billion, and earning $2.54 per share (non-GAAP) instead of the predicted $2.26.
So why is Tesla tumbling today?
Image source: Getty Images.
So what
To find out, let's take a quick look at Tesla's numbers.
Tesla grew its revenue 65% year over year in the fourth quarter. Gross profit margin on that revenue -- which climbed all year long -- grew yet again in Q4. Indeed, it was up 8.2 percentage points from last year's Q4 at 27.4%. Operating profit margin expanded even faster, nearly tripling year over year to top out at 14.7%.
To put that in context, General Motors' operating profit margin is currently just 9.5%, and Ford Motor Company's is only 2.2%. So if you're looking for a reason why Tesla stock gets a valuation multiple much higher than GM or Ford enjoy, well, that's your reason right there.
Finally, on the bottom line, Tesla's profit for the quarter came to $2.05 per share under generally accepted accounting principles (GAAP) -- not quite as high as the $2.54 per share pro forma number that got all the headlines last night, but still a 754% increase over Q4 a year ago.
Now what
Investors, however, don't seem as impressed with what Tesla has "done for them lately." What really concerns them are what Tesla plans to accomplish in 2022. (And admittedly, with Tesla stock trading for 330 times earnings, that's a valid concern.)
Unfortunately -- both for Tesla and for its stock price -- the company was pretty coy about what it expects for the year ahead.
Guidance for 2022 was limited to a bald assertion that Tesla hopes to "achieve 50% average annual growth in vehicle deliveries ... over a multi-year horizon," and a warning that "equipment capacity, operational efficiency and the capacity and stability of the supply chain" could be limiting factors preventing it from hitting that target. As management admitted, Tesla's factories "have been running below capacity for several quarters" because of supply chain snarls, and Tesla fears that this "is likely to continue through 2022."
Final notes: Adding to the bad news, Tesla ruled out potential 2022 catalysts such as a new $25,000 Model 2 economy-class electric car, reports TheFly.com. Indeed, according to TheFly, Tesla "says it won't introduce [any] new vehicles [at all] in 2022."
Evidently, that's not what investors wanted to hear.
