Tesla (TSLA -1.06%) stock is up 7.7% in Thursday's premarket trading as of 8:30 a.m. ET, following the electric vehicle (EV) pioneer's release of a strong fourth-quarter 2022 report the prior afternoon.
The stock's rise can be largely attributed to both revenue and earnings coming in higher than Wall Street's consensus estimates. Investors were also likely pleased that production of the Cybertruck pickup remains on track to begin later this year.
The following is an overview of Tesla's fourth quarter and its 2023 outlook centered on eight key metrics.
Tesla Model 3. Image source: Tesla.
1. Revenue jumped 37%
In Q4, revenue grew 37% year over year to $24.32 billion, topping the $24.03 billion Wall Street consensus estimate. Revenue was 13% higher than in the third quarter.
Year-over-year revenue growth was primarily driven by increased vehicle deliveries and a higher vehicle average selling price (ASP) stemming from the model and regional mix, partially offset by the strength of the U.S. dollar relative to other currencies. Tesla's clean energy and services/other businesses also contributed to growth.
Segment year-over-year revenue performance:
- Automotive segment revenue grew 33% to $21.31 billion.
- Energy generation and storage revenue rose 90% to $1.31 billion. Growth was driven by a 152% increase in energy storage capacity deployments to a record 2.5 gigawatt hours (GWh) and an 18% increase in solar power deployments to 100 megawatts (MW).
- Services and other revenue rose 60% to $1.7 billion. Growth was driven by used car and part sales and an increase in paid use of Superchargers.
2. Vehicle production and deliveries grew 44% and 31%, respectively
In the fourth quarter, Tesla produced 439,701 vehicles (about 20,600 Model S and X units and about 419,100 Model 3 and Y units), up 44% from the year-ago period.
And it delivered 405,278 vehicles (about 17,100 Model S/X and about 388,100 Model 3/Y), up 31% year over year.
3. Auto gross margin declined 4.7 percentage points to 25.9%
In Q4, automotive gross margin (gross profit divided by revenue) based on generally accepted accounting principles (GAAP) was 25.9%. This result was down from 30.6% in the year-ago period, and also lower than the 27.9% in the prior quarter. The decline is largely attributable to the company lowering vehicle prices in the fourth quarter in order to boost demand, as well as inefficiencies at its two newer Gigafactories.
Tesla's gross margin is still strong relative to other major automakers.
4. Operating income soared 49%
In Q4, operating income grew 49% year over year to $3.9 billion. Operating margin (operating income divided by revenue) landed at 16%, up from 14.7% in the year-ago quarter, but down from 17.2% in the third quarter.
5. Adjusted EPS surged 40%
In the fourth quarter, GAAP net income was $3.69 billion, or $1.07 per share, up 57% from the year-ago period. Adjusted for one-time items, net income came in at $4.11 billion, or $1.19 per share, up 40% year over year. This result surpassed the $1.13 adjusted earnings per share (EPS) that analysts had expected.
6. Operating cash flow declined 29%
In Q4, cash generated from operations fell 29% year over year to $3.28 billion. Free cash flow dropped 49% to $1.42 billion.
These declines are not a reason for concern, as cash flows can fluctuate significantly from quarter to quarter for various reasons. Both cash flows were higher for the full year 2022 than they were in 2021.
Tesla ended the quarter with $22.2 billion in cash, cash equivalents, and short-term investments, up by $1.1 billion from the prior quarter.
7. Supercharger stations increased 35%
Tesla continues to build out its network of Supercharger stations. It ended the quarter with 4,678 stations, up 35% from the year-ago period. Supercharger connectors grew 35% year over year to 42,419.
8. In 2023, management expects to produce about 1.8 million cars
Management guided for car production of about 1.8 million, which would represent annual growth of 31%. This projection doesn't include the Tesla Semi and the Cybertruck.
A solid finish to a great year with another new revenue source coming in 2023
Tesla ended a great year on a solid note. And the company has a new source of revenue on the horizon -- its Cybertruck, a futuristic-looking pickup truck, remains on track to begin production at Gigafactory Texas later this year.
This launch follows that of Tesla's Class 8 truck, the Tesla Semi, whose deliveries began in December.
This year could prove more challenging for Tesla than 2022 because of the macroeconomic environment -- namely higher interest rates -- and increasing competition in the EV space.
