Tesla's Q1 earnings report, can impressive gross margins help the stock price return to $1200? (66 points for following and commenting)

April 20, that is, after the US stock market this Wednesday, $Tesla (TSLA.US)$ Financial results for the first quarter of 2022 will be announced。

As one of the most watched star stocks in US stocks, Tesla is the focus of the market every time a financial report is issued, and the stock price is also very active before and after the earnings report; sharp rises and falls are normal.

In March, before Tesla's quarterly report was released, Tesla's stock price rose by more than 20%, and its market capitalization returned to a trillion US dollars.

Well, after the official announcement of the Q1 earnings report,How will the market be interpreted? Will there be positive feedback? Can it drive the stock price back to $1200? Here we need to pay special attention to one indicator in the Q1 financial report - gross profit margin.

Futu Finance Academy has always emphasized that financial reports are treasure maps,Understanding financial reports is an essential skill if you want to tap into the next tenfold bullish stock.Today, the Finance Academy will once again use Tesla's case to take everyone to learn: What is gross profit margin? Why is gross margin a key indicator for Tesla's earnings report?

01 Gross margin is a powerful tool for measuring the competitiveness of automobile companies

For manufacturing companies, especially the vehicle manufacturing industry,Profit indicators are often an important reference factor for analyzing their market competitivenessIt mainly includes gross profit margin, net interest rate, etc.

Here we will focus on analyzing gross margin indicators.

Gross margin is the percentage of gross profit and sales revenue (or operating revenue), where margin is the difference between revenue and cost of sales, expressed by the formula:

Gross margin = gross profit/sales revenue × 100% = (sales revenue - cost of sales) /sales revenue × 100%

Generally speaking, higher gross margin means that the company's products are more competitive, indicating that consumers are willing to pay a higher price than similar products to buy the company's products. When the industry is sluggish or there is a price war, car companies with high gross margins have more room to reduce prices and promote, thus guaranteeing product sales.

Therefore,Companies with the same product structure, automobile companies with high gross margins are relatively more competitive.As far as OEMs are concerned, the gross margins of different models are also different. The higher the model level and the higher the price, the higher the gross margin level.

Note that both gross margin and net profit margin measure a company's profitability compared to its revenue over a period of time. Among them, gross margin only focuses on the relationship between revenue and cost of sales, but net profit margin takes into account all of the company's expenses. The net profit margin also subtracts expenses such as sales, management, and financial expenses from gross profit. Generally speaking, it is much lower than gross margin.

Therefore, gross margin helps the company evaluate its profitability in relation to production and operation activities, while the net profit margin helps the company evaluate its overall profitability.

02 What is Tesla's gross margin ranking in past financial reports?

In addition to selling cars, Tesla also has revenue from car rental, energy storage, services, etc. We focus on the gross profit margin of car sales. In the last three years, Tesla's gross margin of automobile sales as a whole has continued to rise.It also surpassed 30% in Q3 and Q4 in 2021 for two consecutive quarters, reaching 30.6% in Q4.

What is the concept of a car gross margin of more than 30%? Some friends might think that this gross margin isn't very exaggerated. After all, among other celebrity stocks, Apple's gross margin is over 40%, Nvidia's gross margin is over 60%, and Microsoft's gross margin is even close to 70%, all of which far surpass Tesla.

However, gross profit margins in other industries do not have much reference value. If we compare them in the automobile industry, we can see how amazing Tesla's gross margin level is.

The most profitable brand in the automotive industry has always been Toyota. In 2021, the gross margin of Toyota's automobile business was 23.4%, and the overall gross margin of Volkswagen Group, which has the highest sales volume, was 19.2%. Luxury brands generally have high gross margins, but neither Porsche nor Ferrari brands have gross margins above 20%.

Traditional car brands aren't as good as Tesla, let alone other brands. So what about the gross margin situation of NEV companies?

The gross bicycle margin of new energy vehicle companies is higher than that of traditional car companies.Take China's top three new car builders as an example. In 2021, Ideal Auto had a gross profit margin of 21.3%, ranking first. NIO Auto was 20.1%, slightly lower. Ideal Auto was 11.5%, ranking last.

After a round of comparison like this,Everyone knows how excellent Tesla's gross margin of over 30% is，Especially in a context where the supply chain crisis is so serious, it is even more difficult to maintain such a high gross margin.

03 Will Tesla's Q1 gross margin continue to rise?

Tesla's gross margin is already so high, is there any room for improvement in the upcoming 2022 quarterly report? It is mainly affected by 3 factors.

The first factor is yield.The automobile industry is an industry with obvious scale effects. Generally speaking, the larger the scale of production, the lower the cost, and the higher the gross margin. In the first quarter of this year, Tesla achieved production of 305,000 vehicles, compared to 306,000 units in Q4 in 2021, which is basically no different.Therefore, there is little impact on production here.

The second factor is the price of raw materials.In the first quarter of this year, prices of some raw materials in the NEV industry chain rose sharply due to the combined effects of supply chain reasons and inflation factors. For example, the domestic price of lithium carbonate rose from about 300,000 yuan/ton at the end of 2021 to 500,000 yuan/ton.The sharp rise in raw material prices will inevitably put pressure on gross margins.

The third factor is the price of each Tesla model.Since the end of 2021, due to rising raw materials and other reasons,Prices of Tesla models have increased many times, with an average increase of nearly 10%. This is definitely beneficial to gross margins.

Such a large-scale price increase can not only hedge against the rise in raw material prices, but may also further raise the level of gross margin.Tesla's Q1 gross profit margin is still worth looking forward to.

As soon as the financial report comes out at that time, if you want to check Tesla's gross margin level, you can go to the Futu Niuniu individual stock page.Find finance, in the key indicatorsClick on “Gross Profit Margin”You can see it.

If you want to know more about the role of financial indicators, you can also click the “Little Book” below the indicators to enter the investment encyclopedia to learn about the investment role of these indicators.

Finally, in addition to financial data,The market's particular focus on Tesla is also: Tesla's production and delivery guidelines for the whole of 2022 in the Q1 earnings report.

Previously,The market expects Tesla to deliver nearly 2 million electric vehicles in '22.Tesla delivered 310,000 vehicles in the first quarter. In the second quarter, Tesla's Shanghai Gigafactory, which accounts for more than half of production, was seriously affected by the epidemic in the second quarter, which will also affect Tesla's overall production and delivery.The market is also awaiting new production delivery guidelines.

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