Alright, we have been so caught up with Tesla's new factories, batteries and vehicle, the
Q1 earnings call is just around the corner now. And personally, I would like to get some
idea of just how well it might go. Now I didn't have the energy to do my deliveries estimates
for this quarter, but I am feeling well enough to finally do some numbers again. So let's
see if we can get some idea of how this quarter might just go.
We do have another record delivery quarter,
although it wasn't a record production quarter. But the market doesn't care, they just want
to see the financials, that's what matters the most. Therefore we should expect this
to be a record quarter for earnings. In addition to that we are finally getting some sales
this quarter that have caught up to some of the larger price rises. Now, yes there was
inflation involved too, but these prices were also increased due to demand increasing so
much so too. And that was even before oil prices started to increase on top of that.
Therefore, I am hoping for a higher average selling price, and an improved margin. In
addition to that we saw some extra one off costs in OPEX in Q4, that shouldn't be felt
in Q1. Hopefully thus showing a further improvement in earnings from Q4. Alright, so let's work
this out.
Now traditionally my most accurate way of
determining the earnings, was simply adding the increment of vehicles on to the previous
quarter and establishing the average selling price of each model from each factory, and
the extra models sold from the previous quarter. But now the average selling prices have risen
so much, I feel like this will be a less accurate method. Therefore we will need to try something
a little different.
I am instead going to estimate the average selling price of each vehicle, and then use
that to calculate the total average selling price per vehicle, and then for a feedback
loop, I will compare it with the Q4 average selling price, and see if it is a similar
increase in price, from what we expect. If any of this sounds too confusing, don't worry,
it will make sense when I show you.
Alright, well we will start with the ASP of
each vehicle. Now the way I am going to do this, is try and match the waiting time for
each model with what the price would have been when they ordered. In other words, I
way to work out the price of the vehicle when the customer actually ordered it, rather than
when it was delivered. This took quite a bit of effort, but I think is essential.
The Model 3 Standard Range from Fremont is
currently for sale for $47,000, wow that sure increased in price.
You can see the estimated delivery dates for the Model 3 standard range for this quarter,
was still when the price was only $39,990. Wow, doesn't that seem cheap now, a Tesla
for under $40,000. I said those prices were cheap, so much so, that I bought 2 myself
before all the prices went up. It just felt like a good value car.
Alright, so unfortunately we don't seem to be able to realize much of the Model 3 Standard
Range price increase. So we will lock in the $39,990 price. Although these are also all
LFP vehicles, so although the price wasn't higher, the costs should have been lower,
and thus the profit higher.
Ok, so rather than me going into that much detail for each model, you can see how I am
arriving at the average selling price, and it might be a bit boring if I show it to you
for each model from each factory. Anyway, the only Model 3 that increased in
price was actually the Performance and only slightly. With that we get an ASP for the
Model 3 at Fremont of about $45,000. This is not a significant increase.
The Model Y had such a long wait time, that
we go back to what the prices were at around September. the Long Range was still selling
for just $53,990. So actually not a major increase in price again.
We do the same for the S and X, and they too
are missing the big price rises. It seems that this is the reason for the price rises,
as this demand is all dating back from so long ago, which is why they don't appear to
be being felt in this quarter.
Alright, so I think I am actually going to
revert back to my usual style of calculating the earnings, as we actually don't have the
price increases I was expecting here. This method tends to be the most accurate. We are
simply going to add on to the addition of what we had the previous quarter, rather than
calculating them all fresh. It would appear my initial hypothesis was incorrect, now we
have researched when the price increases occurred, relative to when the vehicles were ordered.
Ok from there I have estimated the break down
of the difference in models per factory, with the average selling price. Anyway, all of
this comes to an additional $303 million in revenue from the previous quarter. And this
was mainly felt from the increased production of Model S and X lines, and due to those vehicles
having a higher selling price. This takes us to just over $16 billion in
auto revenue.
Now the all important gross margin. Well I
came into this hoping we would be north of 32%, given we had seen price rises of 10-20%,
but as these have not yet been felt, I am reluctant to raise the margin. There is also
the risk that by the time these vehicles were made, that the costs had increased, even though
they were at the lower price still. On top of that there have been supply chain issues,
and I believe Tesla have had to pay extra to expedite some parts. As much as I would
like to see this higher, I am going for 30.5%. This results in an auto gross profit of $5
billion.
Then we have the energy and services side
of the business. Now this is just a moot guessing game. It's a guess because we don't get the
information on how much energy has been deployed each quarter, like we do for deliveries. It's
moot because it pretty much breaks even, and doesn't affect profits.
But I will just place $800 million in revenue for energy, and $1 billion for services. Although
if Tesla are using more LFP batteries in their energy storage, instead of 2170 cells, then
there is a chance of a slightly higher profit in energy, but it's all kind of small relative
to auto anyway, and will have a negligible consequence on earnings.
Now with move to OPEX, and I think this is
where we make our money. If you recall, we had some extra major expenses last quarter
particularly to do with Elon's exercising his options. These we one off expenses, but
made S, G and A pretty high. R & D was also exceptionally high too.
R & D was high supposedly due to more FSD advances, however, we don't know what else
could be added on to R & D now, namely a potential humanoid robot, and a dedicated robotaxi.
So I am going to keep R & D at a relatively high level of around $700 million. But I am
dropping S, G and A down to just one billion. Bring OPEX to a total of $1.7 billion.
Now that much less expense makes a major difference,
and gives us an operating income of nearly $3.3 billion. This is an increase of 25% from
Q4. Alright, that's starting to look much better. That is an 18% operating margin too,
up from 15% in Q4, that's a really big jump.
After tax we are at a net income of $2.9 billion.
Again about a 25% increase from Q4. Now the all important GAAP EPS diluted figure. In
fact I think it will be slightly less diluted now that Elon has exercised is outstanding
stock options. Anyway, I estimate this figure to come in at $2.63. Which is actually a 28%
increase on Q4.
Now a 28% increase in EPS quarter over quarter,
is absolutely amazing, when annualized it would be the equivalent if a 2.7 times increase.
So this can be viewed as a big jump in earnings. Despite only a minor increase of just 2% in
actual revenue. This is the figure that Wall Street cares about, is the earnings per share.
In my opinion this isn't really a great quarter, but we knew this already, due to the fact
that we had the shut down in Shanghai, and that would have lost us over 10,000 vehicles,
then also this quarter having 2 fewer days than Q4 too, there's probably a total of 20,000
additional vehicles, if we were matching like for like. So that is why this quarter could
be considered not great. But getting to earnings, last quarter had those extra expenses too,
so that could have also been considered not as great as it could have been also. Either
way, it looks to be a great jump in earnings.
One great thing about this quarter is it finally
knocks out the last quarter before earnings started hitting over a billion dollars, and
this will thus have an affect on the trailing twelve month p/e ratio. It changes the trailing
twelves months earnings from $5.5 billion, to $8 billion. Replacing $438 million for
Q1 2021, with nearly $3 billion for Q1 2022. That's a big jump. It would take the p/e ratio
from about 200, down to about 130, at the time of this video with a $1.02 trillion market
cap. And if you annaulize these earnings, it would be a p/e ratio of around 90, based
on just this quarters earnings.
Alright let me know what you think, the earnings
call is early this quarter which generally tends to be a good sign. This will be the
last earnings without Berlin and Texas, so hopefully they continue to get better. Although
I think we will margins much lower in Q2, whilst these factories are ramping, which
I think will also mean Q2 will have a lower EPS than Q1.
This spreadsheet is also available in some of my Patreon memberships if you wanted to
use it yourself.