January 26, 2023

Expert: Tesla stock ‘deserves a premium’ after its Q4 report

Tesla Inc (NASDAQ: TSLA) is trading slightly up in extended hours after reporting record profit and revenue for its fourth financial quarter.

Pro reacts to Tesla’s earnings print

Shares are also up on the rosy guidance. Tesla stuck to its ambitious target of about a 50% growth in deliveries on average over the next several years.

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In 2023, it expects to produce 1.8 million vehicles versus 1.37 million last year. Reacting to the earnings print on CNBC’s “Closing Bell”, EMJ Capital’s Eric Jackson said:

I’ve said it before that I thought Tesla will be the best performing big cap tech stock this year. I still believe that. I thought they’d come through with delivery numbers (guidance) and that’s what they did.

In Q4, though, the EV company came in shy of Street estimates in terms of deliveries as Invezz reported here.

Earlier in January, the multinational came under fire for trimming the prices of its electric vehicles as that tends to weigh on margins. Still, Jackson noted:

Tesla is a massive company now. That brings advantages of free cash flow and operating margins. They can take a hit on gross margins this year if they can maintain their leadership. These are right moves. They’ll be ahead when things turn around.

Tesla stock is now up 40% for the year.

Tesla Q4 financial highlights

Net income printed at $3.69 billion versus the year-ago $2.30 billion
Per-share earnings also climbed significantly from 68 cents to $1.07
Adjusted EPS came in at $1.19 as per the earnings press release
Revenue jumped 37% on a year-over-year basis to $24.32 billion
FactSet consensus was $1.13 a share on $24.67 billion in revenue

Also on Wednesday, Morgan Stanley analyst Adam Jonas named Tesla stock his top pick and said it had about a 50% upside from here. Commenting on TSLA valuation, EMJ’s Jackson added:

Tesla is much more than a shinier car company. They’re a software platform. They have many businesses they can get into, many more levers they have to pull and that deserves a premium.

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