Tesla’s earnings smashed expectations, and set more records. arrow rose.

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Tesla
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First Quarter Preparation, which was revealed on Wednesday afternoon, looks surprisingly cool. The company, essentially, beat inflation by substituting materials and focusing relentlessly on manufacturing.

Shares rallied, offsetting some of the losses seen earlier in the day.

The company (stock index: TSLA) generated a record $3.22 per share from $18.8 billion in gross sales, its highest total ever. It was Wall Street searching for Earnings per share of about $2.20 to $2.30 per share from about $18 billion in sales, while in the fourth quarter of 2021, Tesla earned $2.54 per share on sales of $17.7 billion.

Operating profit came in at a record $3.6 billion, compared to expectations of about $2.6 billion.

Shares were up 4.2% in after-hours trading, at about $1019 a share, shortly after the results were announced. The stock fell about 5% in regular trading on Wednesday, while the stock declined by 5%

Nasdaq Composite

He lost about 1.2%. The

Standard & Poor’s 500

It decreased 0.1%.

Sales of regulatory credits, which Tesla receives because it produces more than its fair share of low-emissions vehicles, contributed to the surprise. Credit sales came in at $679 million in the first quarter, more than double expectations of $312 million.

But even excluding credit sales, operating profit was a record and much better than Wall Street had expected.

Analysts had expected a drop in earnings from the fourth quarter to the first because inflation was supposed to be a headwind for the company. Average price in the first quarter of metal basket That entering electric vehicle batteries increased more than 70% in the first quarter compared to the fourth.

Tesla management cited inflationary pressures in the press release. But Tesla’s cost per car actually fell compared to the fourth quarter.

That, along with most of the reported numbers, was a surprise. One possible and partial explanation is that Tesla purchases are made with long-term contracts. This can delay the effect when spot prices rise.

Another reason for lower costs is that about half of the cars Tesla shipped in the first quarter included iron phosphate, or LFP, batteries. These are the more expensive lithium-ion batteries that do not contain cobalt or nickel, which are metals that allow for better performance. LFP batteries don’t pack as much power into the same cell, but the standard-range Model 3 with the LFP still gets 267 miles on a charge, according to the company.

The stock should be higher on Thursday.

The next point to watch is what emerges from conference call To discuss results starting at 5:30 PM ET, investors and analysts will be interested to learn about production at Tesla’s new plants in Austin, Texas and Berlin, Germany. They will also want to hear about the Covid-19 outbreak in China.

Tesla’s Shanghai facility close At the end of March due to local Covid restrictions. Limited production has reportedly started again, but the situation remains precarious. For example, Tesla needs its Chinese supplier to keep working to ramp up production in reserve.

Tesla said in the press release that it expects to operate below capacity over the next few quarters due to Covid in China and supply chain restrictions. The company still expects to achieve an average annual growth rate of 50% in vehicle deliveries over a “multi-year horizon”.

Options markets indicated a 5% move, up or down, following the earnings release. Stocks have fallen three of the past four times Tesla has reported quarterly numbers. All four times, the company beat analyst expectations.

This is urgent news. Check back soon for more details and analysis.

Write to Al Root at [email protected]