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Tesla Inc hosted an earnings call that can only be described as normcore. With CEO Elon Musk absent — as telegraphed last time — it was left to several other executives, led by CFO Zachary Kirkhorn, to bring the sizzle.
Or rather, to studiously avoid it. The headline numbers were good anyway, providing room for a relatively humdrum event by Tesla’s standards.
Rather than an exposition on manufacturing theory or a swipe at perceived adversaries, Kirkhorn led the
discussion with such meme-ready stuff as “the margin of profitability of each incremental unit with higher fixed cost absorption.†There was a stilted quality to some of the proceedings, and I thought I heard the shuffle of papers at one point.
The thing is, this is how quarterly updates from autos companies tend to sound. It was bracingly boring. That isn’t why the stock didn’t react with more vim (it fell slightly overnight). The reason, as ever, is that expectations for Tesla run far ahead of the actual numbers.
At any other car company, a gross margin of around 30% would probably spur a double-digit bump to the stock. Tesla’s Shanghai factory is the likeliest reason, and this is even more impressive when you consider the supply-chain issues bedeviling the industry. The switch to a less-expensive battery technology — which Tesla now plans to roll out worldwide for standard-range cars — is paying dividends.
It takes a lot to impress, however, when you’re already valued at around $870 billion. Some $90 billion of that — roughly a Ford-and-a-half — was added in just the past 19 days after Tesla reported sales that beat the consensus estimate by about 20,000.
So, a bit more than $4.6 million per extra vehicle for a stock that was running at more than 100x non-GAAP earnings anyway.
Keeping that sort of momentum going requires the continuous reinforcement of Tesla’s destiny. That is what Musk does, or did, on these calls. The more normalised approach has a certain strength in indicating Tesla’s positive numbers can speak for themselves. But in the context of that market cap, they still need a megaphone.
—Bloomberg