Tesla Q3: Overreaction To Cybertruck Comments Creates Long-Term Opportunity

Summary:

  • Tesla, Inc. Q3 earnings showed a decline in earnings, margins, and free cash flow, causing a decline in the company’s share price.
  • Despite the negative earnings report, Tesla has several catalysts coming up, including the Cybertruck launch which is a long-term catalyst for free cash flow growth.
  • The market overreacted to CEO Elon Musk’s comments about the Cybertruck ramp, in my opinion, and investors should focus on the long-term free cash flow ramp.

Tesla Shanghai Gigafactory

Xiaolu Chu

Shares of Tesla, Inc. (NASDAQ:TSLA) slumped after the electric vehicle (“EV”) company submitted its third-quarter earnings sheet on October 18, 2023, which showed a steep Q/Q decline in earnings, margins and free cash flow. Comments about the

$ in millions Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Y/Y Growth
Total revenues $21,454 $24,318 $23,329 $24,927 $23,350 8.8%
Net cash from operating activities $5,100 $3,278 $2,513 $3,065 $3,308 -35.1%
Capital expenditures ($1,803) ($1,858) ($2,072) ($2,060) ($2,460) 36.4%
Free cash flow $3,297 $1,420 $441 $1,005 $848 -74.3%
Free cash flow margin 15.4% 5.8% 1.9% 4.0% 3.6% -76.4%
OCF-FCF conversion 64.6% 43.3% 17.5% 32.8% 25.6% -60.3%


Analyst’s Disclosure: I/we have a beneficial long position in the shares of TSLA, RIVN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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