Tesla earned $2.54 a share for the fourth quarter of 2021.
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Tesla stock dropped after the company reported better-than-expected earnings figures. But the auto maker’s fourth-quarter results might not be good enough for investors.
Shares of Tesla (ticker: TSLA ) were down 2.7% to $914 in after-hours trading.
Tesla reported earnings of $2.54 a share in the fourth quarter from $17.7 billion in sales. Operating profit came in at $2.6 billion and free cash flow at $2.8 billion. Each of those figures represents quarterly records for the company.
Wall Street projected the company would earn about $2.36 a share from $17.1 billion in sales.
Wall Street estimates had been creeping up since the company reported better-than-expected fourth-quarter delivery numbers on Jan. 3. In late December, analysts were projecting less than $2 in per-share earnings for the fourth quarter. Tesla earned $1.86 a share in the third quarter of 2021.
Creeping estimates is one reason investors expected Tesla to earn more than analysts projected. Investors also expect earnings beats because that’s what typically happens. Tesla has beaten Wall Street estimates seven out of the past eight quarters it reported.
That outperformance doesn’t always mean a rising Tesla stock. Tesla shares have only gained three times the day following the past eight earnings reports. The average move, up or down, over those quarters has been about 4%.
The average magnitude of Tesla’s earnings ‘beats” in recent quarters is about 25%. Calculating an average outperformance over longer periods gets tricky because sometimes analysts projected a loss and Tesla reported positive earnings. (There is no percentage outperformance when companies report an unexpected profit.)
The earnings beat for the fourth quarter is about 8%. Solid, but it might not be solid enough given the recent market turmoil. Tech stocks have struggled amid fears of higher inflation and rising rates. Coming into Wednesday trading, Tesla stock was down about 13% year to date, similar to the decline in the Nasdaq Composite. The S&P 500 and Dow Jones Industrial Average had fallen about 9% and 6% over the same span, respectively.
The company will host a conference call at 5:30 p.m. Eastern time to discuss the results. Investors will want to hear what CEO Elon Musk has to say. He doesn’t take part in every quarterly conference call any longer, but he is speaking Wednesday to give investors a product update. What Musk says might move the stock as much as, or more than, the fourth-quarter results.
Tesla stock rose 2.1% in regular trading Wednesday. The S&P 500 closed down about 0.2%.
Write to Al Root at [email protected]
