So over the weekend, we heard of Elon Musk warning employees about the need to focus on delivery costs which are taking a big bite in Tesla’s operating costs in an email. As investors often know, Tesla tends to rush out a significant volume of shipments approaching the year-end.
The motivation for the email sent by Elon Musk was the need to minimize delivery costs. After all, it does not make sense to see a delivery push in the final quarter and see delivery falling drastically in the following weeks. Thus, it shows a sub-optimal spending pattern.
It comes at a time when more plants will go live soon. With the new factories coming up, Tesla would have four plants that will enhance its ability to increase assembly capacities and smoothen the pace of deliveries for the next few quarters.
⏰Will it lead to poor earnings?
The move may sound uncomfortable for investors who are gunning for big delivery figures with the hope of translating them into mega earnings. However, if the end-quarter delivery rush is not realized, it might be less possible to reach a blow-out figure.
As investors, we probably assume that such a change will result in poor delivery or earnings result. So when Elon Musk sent the email, it could be because the delivery numbers were rosy (that is just a guess).
Ultimately, it is hopeful that we can see a better profit margin as Tesla spends less on delivery. This insight will arrive when Tesla dishes out the fourth-quarter earnings at around the end of Jan 2022.
🎉The Expectation
Fourth-quarter delivery is expected to be in the range of 266,000 vehicles. This will bring 2021 delivery to slightly less than 900,000, a record achievement compared to 500,000 vehicles delivered in 2020.
Pika World remains vested in Tesla.
📮What’s on the Menu today?
At 11pm, we will receive the CB Consumer Confidence for Nov which we expect to see a moderation from 113.8 to 110.9.
At the same time, Uncle Powell will testify, and we might gain new insights on the economy and interest rate trajectory. Auntie Yellen will also speak too.
FOMC Member Williams will speak at 11.30pm.
It is 30 Nov, Tuesday, at 7 am in Singapore and 7 pm in New York. It was a strong rebound and we hope all Pika World friends a profitable week ahead!
More Stories
🚀It’s time for a re-assessment; then came Nvidia’s boost.🚀
A flip-flop markets into earnings season
Nvidia pushes the market to roar back.