'This quarter was not rainbows and roses': Wall Street reacts to Tesla's mixed 3rd-quarter earnings report

• Tesla reported third-quarter earnings on Wednesday that beat profit estimates but missed revenue estimates.
• The report generated mixed reactions from Wall Street, with JPMorgan cutting their price target to $150.
• "We continue to see risk to guidance for +50% annual unit volume growth over time," JPMorgan said.
  

Tesla's third-quarter earnings report drew mixed reactions from Wall Street despite CEO Elon Musk's bullish view that the electric vehicle company could one day be worth more than $4 trillion.

Tesla's third-quarter report beat profit estimates, but missed revenue estimates, which added to concerns that the company will be unable to reach its long-running target of 50% unit growth this year.

Here were the key numbers:

Revenue: $21.45 billion, versus analyst estimates of $21.96 billion
Adjusted earnings per share: $1.05, versus analyst estimates of $1.01
Adjusted automotive gross margin: 26.8%, versus analyst estimates of 27.7%

The report sparked a number of price target cuts from Wall Street banks. According to Wedbush, it's more likely the company sees 45% growth in unit deliveries this year instead of 50%.

The potential miss, depending on fourth-quarter results, comes as the company has been hampered by continued logistical and supply chain disruptions. Tesla stock fell about 6% on Thursday.

Here's how Wall Street is reacting to Tesla's third-quarter numbers.

JPMorgan: "The results will likely add to debates about demand destruction."
Price Target: $150 from $153, reiterates "Underweight."

"We continue to see risk to guidance for +50% annual unit volume growth over time (in some years more, in some years less), including given higher prices, higher interest rates, an increasingly tapped-out consumer, and given the paucity of new model introductions, with Tesla's lineup essentially the same as at the start of 2021 after the last Model S & X refresh, with the Cybertruck (originally slated for 2021) still on tap," JPMorgan said.

"We remain cautious on valuation, particularly in the context of lofty unit volume growth expectations, and continue to see material downside risk to our December 2023 price target."

Wedbush: "Tesla is hitting a fork in the road period that Musk needs to navigate the company through..."
Price Target: $300 from $360, reiterates "Outperform."

"This quarter was a respectable performance in a very difficult environment with delivery and supply chain issues front and center in Europe and China that threw another dose of reality for Tesla which has been Teflon-like over the past few years despite supply chain chaos across the auto/tech world. The bullish narrative is clearly 'hitting a rough patch' as Tesla must now prove again to the Street that the robust growth story is running into a myriad of logistics issues as opposed to demand softening with EV competition coming all angles around the globe," Wedbush said.

"Musk's tone was very positive and not wavering from previous commentary around what Tesla is seeing in the market. That said, this quarter was not rainbows and roses and it leaves investors wanting more from Tesla which is held to a higher standard than every other automaker," analysts said, adding that the company could soon launch a $7 billion buyback given the suffering stock price.

Goldman Sachs: "We expect investors to have mixed takeaways from this report."
Price Target: $305 (unchanged), reiterates "Buy."

"We continue to believe that Tesla is well positioned for long-term top and bottom-line growth, given its leading position in the EV market, as well as drivers for cost and EPS. While we expect Tesla to lower vehicles prices going forward, we continue to think it can do so with strong margins. We believe cost drivers will include scale in its new factories given that the cost per vehicle in Austin and Berlin should be well below Fremont longer-term as Tesla is using a purpose built EV factory design in those locations and increasingly reducing parts/steps globally. In addition, we see the IRA as positive for its cost structure and pricing potential in the US," Goldman Sachs said.