Tesla (NASDAQ: TSLA) reported its fourth-quarter and full-year 2021 earnings last week. The California-based electric automaker beat analysts' expectations once again. However, when CEO Elon Musk mentioned that supply chain issues might persist in 2022, the company’s shares fell by 5% in the extended trading hours.
The last year was a breakthrough one for Tesla, where the EV giant managed to grow its volume by nearly 90% year over year. Further, Tesla has also forecast to increase shipments by 50% in 2022. So, does this make the Tesla stock worth buying?
TSLA Stock: Key Financial Numbers
Ongoing challenges in global supply chains had deterred Tesla from running its factories at total capacity in 2021. Despite running its factories below capacity for several quarters, its total vehicle shipments for the fourth quarter saw a 71% year-over-year growth to 308,650 units.
Tesla’s annual deliveries for the fiscal year 2021 also surged 87% to more than 936,000 vehicles worldwide, easily surpassing the electronic vehicle (EV) maker’s goal of 50% growth for the year. The company also has plans to further increase its manufacturing capacity in the current year.
A steep increase in its production and delivery capacity boosted Tesla’s revenue and earnings for the year. As a result, its revenue surged by about 65% to $17.72 billion from $10.74 billion recorded a year ago for the fourth quarter. Besides, operating income improved to $2.6 billion compared to the $575 million in the year-ago period. Tesla attributed its bottom-line growth to factors like a reduction in cost per vehicle (COGS) and an increment in vehicle deliveries.
Tesla’s liquidity position also improved significantly. The company’s cash and cash equivalents increased by $1.5 billion to $17.6 billion in Q4, partially offset by its net debt and finance lease repayments.
What next for Tesla investors?
Tesla has a targeted growth rate of 50% in the current year. It started building Model Y SUVs late last year at its new factory near Austin using the more advanced structural battery pack and 4680 cells and post the final certification it would start delivering them to customers. The company is also trying to get a manufacturing permit from the local authorities in Germany and has started testing equipment at its new factory over there. Moreover, its self-driving software is now being tested on public roads by owners in nearly 60,000 vehicles in the U.S.
Though things are going great for Tesla, some headwinds continue to exist. As per Musk, the constraints in the supply chain are expected to persist this year as well. So, there is a possibility that this increased pressure from commodity prices and supply chain costs might push up Tesla’s expenses in the current year. Besides, the company does not expect to introduce any new models to its fleet this year and has also delayed the release of its much-hyped Cybertruck until 2023.
In addition to the supply chain constraint, Tesla also faces steep competition from its rivals who are all set to launch an array of electric cars, from more affordable models to electric pickups. However, Tesla knows how to capitalize on its adversities. Last year, for instance, it inflated its volume by using less scarce chips and re-writing software when other legacy automakers were idling their production.
Tesla is a stock that can be written off only at your own peril.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
