Elon Musk’s Tesla announced the first quarter results bringing the much needed mojo back in the stock market after the poor show by Netflix. Nasdaq Composite was up by 1.20 per cent with Tesla up by about 9 per cent after the market opened on Thursday. Tesla share price trades at nearly $1065 and is up by almost 48 per cent over the last 1-year.
The first quarter of 2022 was another record quarter for Tesla by several measures such as revenues, vehicle deliveries, operating profit and an operating margin of over 19%. Total revenue of Tesla grew 81% YoY in Q1 to $18.8B. The increase in revenue was impacted by the growth in vehicle deliveries and increased average selling price (ASP). Tesla’s operating income improved to $3.6B in Q1, resulting in a 19.2% operating margin.
Tesla’s quarter-end cash, cash equivalents and short-term marketable securities increased sequentially by $0.3B to $18.0B in Q1, driven mainly by free cash flow of $2.2B and partially offset by debt repayments of $2.1B.
In the past two months, Tesla began deliveries of Model Y from Gigafactory Texas and Gigafactory Berlin-Brandenburg with negligible impact on Q1 gross profit. At the same time, the company is putting significant efforts into in-house cell production, raw material procurement and supplier diversification.
Challenges around the supply chain have remained persistent for the company. In addition to chip shortages, recent Covid-19 outbreaks have been weighing on the supply chain and factory operations. Furthermore, prices of some raw materials have increased multiple-fold in recent months. The inflationary impact on the cost structure has contributed to adjustments in Tesla’s product pricing, despite a continued focus on reducing manufacturing costs where possible.