Hey guys, it's sasha tesla released their q4 earnings last night and there was one big problem. The problem was that the stock market has completely misunderstood what just happened. I am going to explain exactly what happened and why. I think a lot of analysts are completely missing.

The point tesla's share price went up and down throughout the evening and after hours trading and is now trading at 930, as i'm recording this video below the closing price before those earnings came out. So, in my opinion, there are a lot of people out there who simply don't understand what happened last night and in this video i'm going to tell you the real story: what happened with tesla stock yesterday and why this is monumental, why this is huge enormous for Tesla investors remember that i am a tesla shareholder and i'm also a random guy on youtube sharing my opinion, so i might be wrong and i'm definitely going to be biased as a result. So do your own research and analysis before making any investment decisions in this video. I will share some really interesting insight that i picked up last night.

That means i am going to be buying a lot of tesla stock as and when i can get my hands on cash. To add to my long position and if you're based in the uk, the cheapest way to add to your tesla position, is by opening a lightyear investing account, who are the sponsors of today's video light? Here? Is a brand new uk investing app that lets? You invest in u.s stocks like tesla completely for free. There is no commission and, most importantly, no foreign exchange fees buying a one thousand dollar tesla share with free trade costs four dollars. Fifty trading two one two will charge you one dollar, fifty and light year charge you nothing.

In fact, you can convert up to three thousand pounds per month into dollars to buy your us stocks without paying any fx fees at all use my link in the description. If you want to buy some tesla stock or any other us stock completely for free and light here will also give you 10 just for signing up and making any deposit of one pound or more so you can get paid for trying the platform out not too Shabby okay: first, let's talk about tesla's income tesla made almost 16 billion dollars in automotive revenue in q4, which is ridiculous because it is 32 up on the previous quarter and 71 year-on-year and the automotive gross margin is 30.6, which is phenomenal. But the really interesting bit lies further down. You see tesla posted an operating margin of 14.7, which is good.

It is a new record and the earnings per share on a non-gaap basis were 2.54, and here is the first problem. The wall street consensus was somewhere in the 2.33 to 2.40 range, so this was a beat, but there were a lot of optimistic forecasts out there saying that tesla might hit as high as 2.80 earnings per share. So some people looked at this and said well. Tesla did okay, but not as well as maybe they could have done.

But all you have to do is scroll down to the more detailed p l version on page 30, and you will see that the selling general and admin expenses have gone up quite a lot up to 1.5 billion dollars. From generally hovering around the 1 billion per quarter mark before, why did that happen? Well, remember that elon musk exercised all of those options into shares in december, well that fun and games cost tesla 340 million dollars in tax, which explains the bulk of that increase in costs, and here is some magic for you. The total number of shares used in that eps calculation is 1.129 billion, take 340 million dollars and divide it by 1129, and you get 30 cents. Now go back to that earnings per share number of 2.54 and add the 30 cents that we just got and you get a total of two dollars: 84 cents.

So the real earnings per share here is way way way above market expectations. And if you add that 340 million dollars to the operating income, the operating margin goes from fourteen point, seven percent to sixteen point: six percent: this is mind-boggling. Sixteen point: six percent look at this chart on page ten. This real operating margin destroys any other car company.

This is insane - and this is before all of the optimization coming later this year with new factories, new casting 4680 cells and everything else that is going to increase margins even more and while we're talking about income here is another fun. Calculation. Take the current market cap of 941 billion dollars and then divide it by 1.129. The total diluted number of shares then go and divide that by 2.84 earnings and divided by four to annualize it because those earnings are per quarter.

That shows you that the real terms trailing p e ratio for tesla based on this last quarter is 73.. This is a company that was sitting at over a thousand p e ratio a year ago. And what do you think is going to happen when those two new factories open up in the next couple of months and add to that? The remark that elon musk made on the call last night he said that he expects the output from fremont and shanghai to grow by 50. In the next year sure we might have a market downturn and all of that, but whatever risk worsening scenario you bake into your model.

How low do you think is a reasonable p e ratio for a company growing at over 70 per year and continuing with that growth? How low do you think that pe ratio can realistically go now? Let's talk about the new product roadmap that elon announced yesterday, because it was kind of weird it was a sort of climax anti-climax. The big announcements were that the cyber truck is not coming anytime soon, don't get your hopes up. It won't be coming this year and they're currently aiming for sometime in 2023. So who knows? There was no real information about the semi and elon confirmed that tesla is not working on a compact vehicle that rumored 25 000 car and the moment elon said those things.

The share price completely tanked in aftermarket training, because analysts don't understand what he actually said here is what he actually said. Tesla has demand that is going absolutely through the roof, even as they are growing their production and revenues at 70 percent a year. The demand is actually growing way faster and there are no signs that this trend is going to change. In fact, there are many signs to the exact opposite.

There were a lot of critics over the last few years saying that paying fifty thousand dollars per car is too expensive and nobody would want to buy them, but the data says the exact opposite is just not the case. Data in the quarterly report supports this as well. The global vehicle inventory is down to just four days literally any car that tesla has for sale in any location, gets snapped up immediately. The model 3 and the model y are now becoming the most popular cars in the world.

You can see them becoming the number one and number two best-selling cars in one country after another, and this is not changing anytime soon. This is happening right in front of everyone's eyes, but people don't seem to get what that really means. Tesla has a winning product and they are doing everything in their power to scale the production of that winning product. The cost of manufacturing of one of those cars for tesla is about 36 000 and the average revenue per delivered car in q4 is fifty one thousand seven hundred dollars.

That's that thirty point. Six percent margin i mentioned earlier, but on the call last night, elon musk confirmed that austin will start production of the model y cars with the new 4680 structural battery packs. These are going to increase range and reduce the price per pack by around 15 to 20 percent. According to various reports which, given the fact that the pack is somewhere in the region of 20 of the value of the car, means that that alone will add about four percent to the margin on the car.

Four percent, just from starting production in four 680 cells, is incredible and if you think about what that means to the overall profitability, you can see some really amazing numbers. Now tesla is expecting to start selling austin made cars in q1 this year. So we are not far, and if you built a money printing machine that is printing, more money, every single quarter, it makes a whole lot of sense to just go and build more production lines for the exact same thing, which is what they are doing in berlin And austin, and it also makes sense to then scale the rate of production on those lines as soon as possible, to focus your attention on that. Yes is going to come at the expense of building new production lines, launching new models and some members of the tesla q community seem to think that that is a really big deal, because in order to be truly successful, you need about 69 different models like what Mercedes have, but then you remember what apple did with the iphone, and you begin to understand that sometimes less is actually more one super important thing that came up towards the end of the q.

A yesterday was that tesla said four 680 batteries are not going to be a limiting factor for production in 2022.. Tesla have recently struck a number of deals for sourcing materials for their batteries and their k20 facilities, apparently making a lot of them, and there have been photos of the 4680 production being set up in texas as well, and we are now hearing that panasonic is actively Ramping up the building of the factory that they are going to be doing for the 468 cells to help tesla with the volume. So it looks like tesla is at the turning point of having solved their battery supply issues, which is particularly good when you're talking about the point in time when you're about to open two of the biggest car factories in the world. Where you're going to be using those batteries but wait, there is more because elon musk said that one of the two biggest things that tesla is working on this year is fsd tesla's, full self-driving software.

There has been a lot of recent improvements in fsd and elon musk made the same point multiple times throughout the earnings call, but i don't think many people heard it even though he just kept repeating it. Tesla confirmed that fsd is now installed. On 60 000 cars uh in the united states, which is huge way more than anyone expected and the software is improving incredibly fast, the number of interventions per mile is dropping massively and elon has said that he expects fsd to be orders of magnitude better than human Drivers in the very near future, he actually said this year, but remember that elon musk has been saying the exact same thing since 2016.. So, although there is a lot of evidence now, a lot of video evidence that is pointing to the fact that maybe we are closer than we have been and that it is really improving fast, take that statement with a pinch of salt.

The point is, though, eventually, whenever it does happen, fsd is going to be good enough. It's going to be better than humans by orders of magnitude, and you can already see the massive improvements at the moment every single month, and there is literally no other self-driving software that is even remotely close in terms of capability, not in the same league. There's a lot of people saying lots of stuff lots of people, pretending, they're doing stuff lots of you know geo offense testing of whatever software, but no company has software on customer owned cars that is actively collecting data that is actually training the system that is improving The system, at this rate not even remotely close, and that means two things first elon - believes that fsd will make traditional car ownership redundant, which is actually phenomenal for tesla. You won't need to go and buy a car for fifty thousand dollars.

You will just be able to go and use the car as a robo taxi, as in where you need it and a much lower cost. Instead, this won't work everywhere and not for everyone, but for many people living in cities, for example, and in built up areas, this is going to be a huge shift. It will add hours to your day when you don't have to drive your car and instead you can work or, as elon musk put, it engage in amusement activities and it's going to cost you a lot less too. He said it would cost about one-fifth of the cost and elon also said that when fsd is fully available, it will become pretty much necessary for every car sold to have fsd software.

And when you have a de facto monopoly on the software - and there is no reasonable alternative, very good things can happen to your commercials and to your share price. Ask microsoft, one of the best bits about this quarterly earnings report was tesla sticking two fingers at all. The other car manufacturers tesla is absolutely killing it and they know it. I found it hilarious in this report.

They did a very public demonstration of their balls of steel. The media is publishing all these completely false made of new stories of how gm is actually competing. With tesla and joe biden said that gm ceo, mary barra is leading the world as making electric vehicles by the way in case you're not aware. Gm apparently sold 26 evs in q4, not 26 026 tesla sold 308 000.

The ceo of ford has recently claimed that ford is also leading in the ev race, so there's a lot of morons running other car companies who are okay with blatantly lying to pretend that they are not completely and totally screwed and the process of going bankrupt. Congratulations on patting yourself on the back when you are just completely full of now. Tesla has decided to start poking fun at this competition that keeps on coming. They have added these new charts to the quarterly report, a chart showing how tesla's growth is literally on a different planet to the pathetic attempts by all the incumbent, car manufacturers and another chart showing that they are now also more profitable on a fully costed basis than All of those guys too remember that the last point on the chart for tesla is actually much lower than it should be because of that tax cost, so tesla is now killing it.

Whichever way you look at it, whichever numbers you look at and they are so confident about what they're doing that they are openly laughing at the competition if you like, investing in a company with balls of steel, this is what it looks like. There was one thing in the earnings yesterday, though, that was pretty bad and i thought i'd point that out as well. Elon musk began talking about optimus and went off on a bit of a tangent. This is the tesla humanoid robot project and saying that tesla wants to figure out how to make these robots to replace manual.

Labor. Remember that dancing, robot shenanigans, that happened it wasn't that long ago. The plan is to start testing them in tesla factories for menial jobs. First, that is apparently what they're doing and elon said.

This is tesla's biggest priority for 2022 and here's the thing i admire tesla for pushing the boundaries, for you know, innovating, really trying to take it to the next level. That is how the greatest companies grow. Companies, like google, regularly waste a ton of effort on products that they later scrap, so this is completely normal, but building a genuinely useful humanoid robot is going to be orders of magnitude more complicated than full self driving and they are still some way off with full Self driving, so i am pretty much ignoring all of that mumbo jumbo about the robot for now in my assessment evaluations, because i think we are many many years away from that being anywhere near reality at best now. I hope that tesla doesn't take their eye off the ball too much with the rest of their work, which has been really excellent to focus on this project, because i am not convinced it isn't necessarily the best use of time at the moment.

But let's see, maybe i'm going to be completely wrong on that one. If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later,.