Tesla Posts Highest Profits Ever Despite Concerns About Musk’s Twitter Purchase Causing Brand Risk

Tesla reported record financial performance that exceeded expectations despite concern over the recent purchase of Twitter by Elon Musk, the electric automaker’s chief executive.

Tesla boasted revenues of $24.32 billion for the fourth quarter, surpassing analysts’ expectations of $24.16 billion and reflecting a 37% year-over-year increase. Total gross profits were $5.78 billion, marking a 19% year-over-year increase. The metrics increased by 51% and 53%, respectively, for the full year.

“In the last quarter, we achieved the highest-ever quarterly revenue, operating income and net income in our history,” the company said in an earnings report. “As we progress into 2023, we know that there are questions about the near-term impact of an uncertain macroeconomic environment, and in particular, with rising interest rates. The Tesla team is used to challenges, given the culture required to get the company to where it is today.”

Shares for Tesla rose 8.6% as of Thursday afternoon; the company released the earnings report after the bell on Wednesday. Shares have nevertheless fallen nearly 50% over the past year, underperforming the S&P 500 Index and the technology-heavy NASDAQ Composite.

“In the near term we are accelerating our cost reduction roadmap and driving towards higher production rates, while staying focused on executing against the next phase of our roadmap,” the company continued. “In any scenario, we are prepared for short-term uncertainty, while being focused on the long-term potential of autonomy, electrification and energy solutions.”

The robust earnings news comes after Musk faced significant pressure from investors over his acquisition of social media company Twitter. Some believe the move distracted the billionaire entrepreneur from his work at the publicly traded automaker and linked the firm to considerable political controversy. Net favorability for Tesla among Democrats decreased 20.3% between October and November, the time frame of the acquisition, according to a survey from Morning Consult, while net favorability among Republicans rose 3.9% over the same period.

One investor asked during an earnings call whether brand damage from the acquisition has impacted demand for Tesla vehicles. Musk responded by checking his Twitter account and noting that he now has 127 million followers, claiming he is “reasonably popular” apart from “a few people” complaining. “I think Twitter is actually an incredibly powerful tool for driving demand for Tesla,” he asserted. “And I would really encourage companies out there of all kinds, automotive or otherwise, to make more use of Twitter and to use their Twitter accounts.”

Tesla previously announced that vehicle production in the fourth quarter surpassed 439,000 as vehicle deliveries reached 405,000. The metrics grew 47% and 40%, respectively, for the full year despite “supply chain related challenges.” Musk recently said that Tesla has “excellent demand” and expects to “sell every car that we make for as far into the future as we can see.”

The brand’s strong performance comes despite logistics bottlenecks that have increased production costs worldwide. Musk said last summer that the past two years have been an “absolute nightmare” for disruptions and called the company’s Berlin and Austin facilities “gigantic money furnaces.” Tesla has also been buoyed by public policies such as the Inflation Reduction Act, which includes $7,500 tax credits for some new domestically produced electric vehicles and $4,000 tax credits for used ones.

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