Tesla Inc. earned record profit in the first quarter, sidestepped an industry chip shortage, improved its manufacturing and even made money off Bitcoin.
And yet shares of the EV maker fell as much as 3.1% in late trading after results were announced Monday, a sign of the lofty expectations Tesla now contends with after an eightfold gain in the stock last year.
Among the quibbles from analysts: Tesla didn’t offer a specific estimate for vehicle deliveries in 2021.
Chief Executive Officer Elon Musk is pushing to ramp up production and maintain Tesla’s dominance in the electric vehicle market, but competitors are moving in aggressively.
Musk said Monday demand is higher than it’s ever been, but without more numbers to go on, investors shrugged.
“It’s all good, but there’s not a lot of news and it wasn’t a blowout,” said Gene Munster of Loup Ventures. “Everything happened that people thought would happen.”
The company pulled a new lever to juice earnings in the quarter — Bitcoin — generating $101 million in income after selling about 10% of its holdings.
Profit from Bitcoin, regulatory credits and tax benefits contributed about 25 cents to Tesla’s adjusted earnings of 93 cent a share, allowing the carmaker to beat Wall Street’s 80-cent average estimate, Dan Levy, an analyst with Credit Suisse, wrote in a note Monday.
Tesla Chief Financial Officer Zachary Kirkhorn said Tesla values Bitcoin as a way to store cash while preserving liquidity, especially with traditional investment yields being so low.
“We do believe long-term in the value of Bitcoin,” he said on a conference call.
“It is our intent to hold what we have long-term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles.”
Bitcoin gained as much as 1.9% and traded above $54,000 after that reaffirmation of Tesla’s commitment to the cryptocurrency.
The company disclosed its purchase earlier this year and also said it would accept it as a form of payment. That surprise announcement helped increase the legitimacy of Bitcoin and spurred a rally in its value.
Chip Shortage Woes
Tesla’s results kick off a year in which the Palo Alto, California-based automaker will be expanding operations on three continents, including completing new factories in Austin, Texas, and Berlin.
Tesla said it expects 50% annual growth in deliveries “over a multi-year horizon,” which is consistent with its previous wording. That implies deliveries of about 750,000 cars this year.
But that failed to excite investors — and analysts who had hoped for additional guidance from Musk on the call were disappointed.
Tesla fell 2.5% to $719.86 in late aftermarket trading. It closed the session up 1.2% to $738.20.
The company delivered more than a half million cars in 2020 and reported deliveries of 184,800 cars worldwide in the first quarter, topping the final three months of 2020 by about 4,000 vehicles — despite a shortfall in supplies of semiconductors.
Tesla and other automakers had to cope with strained supplies of chips and other materials, an unexpected headache that comes as they have been ramping up production to meet higher consumer demand amid the pandemic.
Consultant AlixPartners has said the chip shortage could cost automakers $61 billion in lost sales this year.
“This is a huge problem,” Musk said on the call. “Q1 had one of the most difficult supply chain challenges that we’d ever experienced.”
The CEO said he expects the shortages to continue to impact the company in the current and third quarters.
Growing EV Pie
The EV market leader faces a new wave of competition from several new models being launched this year by startups such as Amazon.com Inc.-backed Rivian Automotive Inc. and established automakers including General Motors Co. and Volkswagen AG.
Tesla sought to assure investors in its quarterly release by noting growing demand for EVs and its own efforts to rapidly expand production capacity.
“As more OEMs join our mission by launching EVs, we believe consumer confidence in EVs continues to increase and more customers are willing to make the switch,” it said in a statement.
Tesla’s first-quarter revenue grew 74% to $10.39 billion in the January through March period, close to analysts’ estimates for $10.41 billion.
Sales of regulatory credits rose to $518 million this quarter, up from $401 million in the last quarter of 2020.
The company earns more money selling those credits to other automakers than it does from its core business of making and selling cars.
That’s a potential issue for Tesla as more established carmakers start to offer their own line-up of EVs — and may not need to buy as many credits in the future despite tightening carbon-emissions standards globally.
Tesla indicated it is getting better and more efficient at building cars. Its automotive gross margin of 26.5% came in above the Bloomberg consensus of 24.2%.
The company attributed the boost to cost-cutting that outpaced lower average selling prices.
Fatal Crash Questions
The company challenged concerns about a fatal crash of a Model S in Texas earlier this month, saying it believes someone was in the driver’s seat at the time.
Tesla cautioned it hasn’t been able to retrieve all the data from the vehicle, which counters initial police comments that “no one” was was driving.
That led to speculation that Autopilot, Tesla’s name for its driver assistance feature, was a possible factor in the fatal crash.
“We were able to find that the steering wheel was indeed deformed, leading to the likelihood that someone was in the driver’s seat at the time of the crash,” Lars Moravy, Tesla’s vice president of vehicle engineering, said on the company’s earnings call.
The automaker is working with federal regulators in their investigations, Moravy said.
The crash near Houston killed two men and triggered probes by the National Highway Traffic Safety Administration and the National Transportation Safety Board.