Tesla pops – and warns on inflation

Yesterday Tesla delivered its earnings report in a call to investors. In that report Tesla surprised everyone with how well they are doing. But Elon Musk, the founder, warned that inflation will take its toll in future. And he also accused the Biden administration of low-balling the numbers.

How well did Tesla do?

Sources for this story include Barron’s, Fox Business,Fortune, Investors Business Daily, The Street, CNBC, and The Daily Wire. Mr. Lars Strandridder of Denmark, who runs the YouTube channel BestInTesla, offered this analysis as well.

Note carefully: CNAV does not offer financial advice, but only news. What any investor does with that news is up to them.

The Tesla stock (NASD:TSLA) closed down about fifty dollars a share before the earnings call. Elon Musk likes to call major shareholders with the earnings report, and they like to hear from him.

What he had to tell them last night, caught many analysts by surprise. Annualized revenues grew 81 percent in the first quarter. Production rose 69 percent, and deliveries almost 68 percent. Tesla now has four factories on three continents actively producing cars – and still the company cannot keep up with demand. Giga Shanghai must recover from a shutdown, and the new Berlin and Austin factories need to hire the workforce to bring them to full capacity. All these changes are in the works. So Elon Musk expects the company to grow 50 percent per year on average for many years.

As of 10:40 a.m., Tesla stock had climbed ninety dollars, to about $1,067.27 US. An analyst at the Bank of Switzerland looks for the stock to hit $1,125. While Tesla broke records, every rival it has in the electric vehicle market, in America or China, lost value.

Musk targets inflation

But Elon Musk sounded one sour note that he had to sound, to maintain investor trust. He told shareholders that inflation is worse than the government admits, and will continue for the rest of the year. And he should know! He has suppliers asking him to pay them 20 to 30 percent more. Tesla has already raised the prices of many of its cars. The only reason they won’t have to do that again is that they’ve locked in many supply contracts. But sooner or later, those contracts will expire and Musk will have to renegotiate.

Of course, the Biden administration is doing what Democrats do: blame everybody but themselves. In this case, they’re blaming Russia. News flash: that husky won’t hunt anymore. They tried it during the Election of 2016, don’t forget, and it’s getting some of them in legal trouble. We all know why we have inflation, and who is responsible.

Bottom line: Tesla had a banner quarter that beat everyone’s expectations for the company – and every rival’s performance. Investors see that. The big thing that threatens Tesla, threatens everybody. Which is something to remember at the upcoming Midterms.