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Exclusive: Tesla Q1 earnings blow estimates - Dumping Bitcoin for 101 million profit
Tesla (TSLA) posted first-quarter profit that handily exceeded estimates, with the results dovetailing the record deliveries the electric vehicle-maker reported during the first three months of 2021. However, first-quarter revenue came up slightly short of expectations, and shares dipped by about 1% in late trading.
Here were the main results from Tesla's report on Monday.
Q1 Revenue: $10.39 billion vs. $10.42 billion expected and $5.99 billion Y/Y
Q1 Adjusted earnings per share: 93 cents vs. 80 cents expected and 23 cents Y/Y
Earlier in April, Tesla reported first-quarter vehicle deliveries that set a record at 184,800, with the vast majority comprised of the more affordable Models 3 and Y. The record number of hand-overs came even as Tesla and the broader auto industry contended with a protracted semiconductor shortage, and ongoing disruptions stemming from COVID-19.
The results boded well for the electric vehicle-maker's first-quarter operating results, which saw the company post yet another quarterly profit. Automotive gross margins unexpectedly expanded by more than 1 percentage point to 26.5%, with cost-cutting helping expand profitability even as sales of Tesla's lower-priced models strongly outpaced those of its higher-margin Model S and X vehicles.
In its letter to shareholders Monday, Tesla said it still plans to achieve 50% average annual growth in vehicle deliveries over a multi-year horizon, reiterating the target CEO Elon Musk floated on the company's January earnings call. Last year, Tesla delivered just under half a million vehicles, coming up just short of Wall Street's estimates at the time.
"In some years we may grow faster, which we expect to be the case in 2021," Tesla said. "The rate of growth will depend on our equipment capacity, operational efficiency and capacity and stability of the supply chain."
The ramp-up of production at Tesla's Shanghai Gigafactory, which began delivering vehicles to customers in China in January last year, and its forthcoming facilities in Berlin and Texas are set to help achieve this goal. Both in-progress Gigafactories in Berlin and Texas are on track to begin production and deliveries this year, Tesla said Monday. And Tesla Semi deliveries will also begin later in 2021, the company added.
To date, many analysts on Wall Street have viewed demand out of China as a key force behind the company's winning streak. The company does not break out deliveries or sales by geography, but Wedbush analyst Dan Ives has suggested China could comprise some 40% of Tesla's total global deliveries as soon as next year.
In spite of stiffening competition from the likes of General Motors (GM) and Nio (NIO), "Tesla continues to see growing pent-up demand throughout China and Europe, with the U.S. on the verge of seeing a further inflection in demand in our opinion once the EV tax credit ceiling is lifted," Ives wrote in a note published ahead of earnings results.
He cited the beneficial impact of the Biden administration's incentives as "green tidal wave" that may boost Tesla.
"While Tesla has navigated a myriad of Chinese government PR issues, chip shortages, and a further spotlight on its auto pilot safety record (given the Texas crash) over the past month, the Street is now laser focused on gauging the annual delivery trajectory for 2021 heading into next week's main event which we expect to drive the stock much higher over the coming months," he added.
The role of cryptocurrency in Tesla's future strategy was also set to be a focal point in Monday's earnings results. The company disclosed in February that it purchased $1.5 billion worth of bitcoin, and began accepting the cryptocurrency as a method of payment for its vehicles in late March. Quarter-end cash and cash equivalents declined by $2.2 billion to $17.1 billion, "driven mainly by a net cash outflow of $1.2 billion in cryptocurrency purchases," Tesla said in its shareholder update. Sale of bitcoin generated a $101 million positive impact to quarterly results, it added.
Shares of Tesla have risen about 4% for the year-to-date through Monday's close, underperforming against the S&P 500's 11% rise over that time period.
Read the Official Q1 report in PDF format HERE