Tesla Q3 FY2021 Earnings Report Preview: What to Look For

Tesla Inc. (TSLA) is currently on track to deliver 50% more vehicles in fiscal year (FY) 2021 compared to last year after record deliveries for the third quarter. The electric vehicle maker achieved that turbo-charged growth despite supply-chain disruptions that have hobbled many global automakers this year.

Investors will be watching to see whether Tesla can maintain its strong financial performance amid ongoing supply-chain challenges when it reports earnings on Oct. 20, 2021 for Q3 FY 2021. Analysts expect adjusted earnings per share (EPS) and revenue to show robust growth, but at a decelerating pace compared to recent quarters.

Investors also will focus on Tesla's vehicle deliveries for the quarter, which the company reported earlier this month. Total deliveries for Q3 FY 2021 jumped 73.2% to 241,300 compared to the same quarter a year ago.

Shares of Tesla have outperformed the broader market over the past year. The stock has come down from peak highs reached in January, but it has been trending upward again since mid-May and has recently begun to approach similar levels. Tesla shares have provided a total return of 87.8% over the past year, well above the S&P 500's total return of 28.4%.

Tesla Earnings History

Tesla reported Q2 FY 2021 earnings that surpassed analysts' expectations. Adjusted EPS beat estimates, rising 231.8% compared to the year-ago quarter. Despite that rapid pace of growth, it was a deceleration from the previous quarter. Revenue also exceeded analyst forecasts, rising 98.1% year over year (YOY). It was the fastest pace of revenue growth since the final quarter of FY 2018. Tesla said that the global semiconductor shortage continued to pose supply-chain challenges during the quarter as they had in recent quarters.

In Q1 FY 2021, Tesla beat on earnings while matching estimates on revenue. Adjusted EPS rose 306.6% compared to the year-ago quarter, its fastest pace out of any quarter in at least the past four years. Revenue expanded 73.6% YOY, continuing an acceleration trend that started in the third quarter of FY 2020. Tesla highlighted that it achieved its highest-ever vehicle production and deliveries during the quarter.

Analysts expect Tesla's earnings and revenue to continue growing at a healthy pace in Q3 FY 2021, albeit more slowly than recent quarters. Adjusted EPS is expected to increase 114.5% YOY as revenue expands 58.1%. It would be the slowest pace of growth for either metric since the final quarter of FY 2020. For full-year FY 2020, analysts expect adjusted EPS to rise 154.7% as revenue expands 63.6%.

Source: Visible Alpha; Tesla (Q3 FY 2021; Q3 FY 2020; and Q3 FY 2019).

The Key Metric

As mentioned above, investors will focus closely on Tesla's vehicle deliveries. The company's primary business is making electric cars and it needs to continue expanding production in order to grow revenue and profits. The company's strong vehicle deliveries in the first three quarters of FY 2021 position Tesla to easily surpass its goal of boosting vehicle deliveries by more than 50% for the entire year. However, the market is becoming increasingly competitive, with Volkswagen AG (VOW3) becoming the top-selling all-electric vehicle maker in Europe last year. Through the first half of 2021, Tesla was the global leader in the market for plug-in electric vehicles with a market share of nearly 14.6%. Volkswagen was second with a market share of 12.5% and General Motors Co. (GM) was third with a market share of nearly 8.6%.

Tesla has expanded its vehicle deliveries from a total of approximately 103,200 in FY 2017 to about 499,600 in FY 2020. Growth has slowed over the past several years, however. Vehicle deliveries rose 137.9% in FY 2018. That pace of growth decelerated to 49.8% in FY 2019 and then to 35.9% in FY 2020. In the second quarter of FY 2020, vehicle deliveries fell for the first time in at least the past 13 quarters. But they rebounded in Q3, rising 43.6%. The pace of growth accelerated to 61.2% in Q4 and then to 108.9% in Q1 FY 2021 and 122.0% in Q2 FY 2021. For Q3 FY 2021, deliveries rose at a healthy 73.2% rate. While that's slower than recent quarters, it nonetheless puts them on pace for a strong year.