Tesla Shares Sink 5% as Q3 Revenue Falls Below Estimate; Musk Says Q4 Will be Extremely Good

Tesla shares sank on Wednesday after hours after the electric car giant reported third quarter earnings. Elon Musk's flagship company reported revenue of $21.45 billion in the third quarter and adjusted earnings per share of $1.05.

The quarterly revenue was up 56 percent year-on-year but it was below analysts expectations of $21.96 billion.

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The stock fell as much as 5 percent as the revenue came in below expectations, even though EPS was better than expected. The shares dropped despite Tesla assuring investors that it expects an average annual growth of 50 percent in vehicle deliveries for the year.

Increasing Vehicle Production

"We remain focused on increasing vehicle production as quickly as possible by increasing our weekly build rate in Fremont and Shanghai and progressing steadily through the production ramps in Berlin and Texas," Tesla said in a statement.

The net income for the third quarter was $3.3 billion, which was nearly double the $1.62 billion reported in the same quarter a year ago. The revenue was $18.69 billion in the third quarter, which was up 55 percent year-over-year.

In comparison to the Q3 results, Tesla's revenue and profits in the second quarter had beaten Wall Street expectations. While revenue hit $16.9 billion against expected $16.88 billion, adjusted earnings per share was $2.27 against a predicted $1.83.

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Tesla said it manufactured 365,932 vehicles in the third quarter, while vehicle deliveries stood at 343,830 units. This compares with 258,580 units produced and 254,695 units delivered in the second quarter. In the third quarter of 2021, Tesla had produced 237,823 vehicles and delivered 241,300.

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Giga Berlin

Elon Musk said in the earnings call that Tesla's Giga Berlin achieved another milestone of 2,000 cars made in a week. Giga Austin or Giga Texas should reach this milestone very soon, he added. He said the fourth quarter looks quite good for Tesla.

"Our free cash flow surpassed $3 billion in Q3 and approached $9 billion in the past 12 months. As our factories ramp, we're looking forward to a record-breaking Q4. So, it really, knock on wood, it looks like we'll have an epic end of year. So, Q4 is looking extremely good," Musk said.

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