Text size Tesla reported fourth quarter earnings per share of $1.19 from sales of $24.3 billion. Anna Moneymaker/Getty Images Tesla posted solid fourth-quarter numbers, but investors will want to hear more about demand and profit margins later this evening. Tesla (ticker: TSLA), on Wednesday evening, reported fourth quarter earnings per share of $1.19 from sales of $24.3 billion. Operating profit was a record $3.9 billion, up from the prior record: $3.7 billion reported in Q3. Wall Street was looking for earnings per share of about $1.13 and operating profit of $4.2 billion from $24.7 billion in sales. Free cash flow for the quarter came in at $1.4 billion. Analysts were expecting $2.7 billion. Looking ahead, Tesla said it plans to produce 1.8 million units in 2023. The Street is looking for about 1.9 million units. It’s an OK report. Shares are up 3.8% in after hours trading shortly after results were released. Tesla stock closed up 0.4% at $144.43 in Wednesday trading. The S&P 500 and Dow Jones Industrial Average were both flat on the day. Investors can expect shares to move after the company’s earnings conference call which starts at 5:30 pm eastern time. Investors will be looking for comments about production, profit margins, EV competition and new products. They’ll want an update about everything. This is breaking news. Read a preview of the earnings report below. Earnings reports from Tesla are always must-watch events for investors, and the EV pioneer’s coming fourth-quarter report Wednesday afternoon is no exception. In fact, it might be the most important earnings report in the company’s history. There have been other “most” important quarters in the company’s past. In 2010, Tesla (ticker: TSLA) reported its first full quarter as a publicly traded company, in which it generated about $31 million in sales from the original Roadster. There were the quarters when the pioneering EV started delivering the Model S—its first mass-produced car—in 2012, and the lower-price Model 3 in 2017. There was also the third quarter of 2019, when Tesla turned in a surprise profit. . In the three-plus years before that period, Tesla had lost about $2.5 billion in operating profit and used more than $5 billion in cash total. Since then, Tesla has generated almost $19 billion in operating profit and $15 billion in free cash flow cumulatively. There is a case to be made that the coming fourth-quarter report trumps all of those. Tesla is now the most actively traded stock in the US market, but faces a tough economic environment, with rising interest rates, elevated inflation, and recession fears. In addition, EV competition continues to grow, and investors also are wary of CEO Elon Musk’s new role as owner of the social media platform Twitter. “After experiencing unprecedented hyper growth over the past few years in the EV market which was essentially created by Musk…Tesla faces a darker macro in 2023,” wrote Wedbush analyst Dan Ives in a Tuesday report. Ives is a Tesla bull, rating shares Buy. His price target is $175 a share. Tesla dramatically cut prices on its EVs around the world at the start of 2023 amid that gloomier macroeconomic backdrop, which has created fear and uncertainty around demand for EVs and Tesla’s profit margins. For 2022, Tesla will generate gross profit margins of about 26% from its automotive business, based on the first three quarters of the year and Wall Street consensus estimates. For full year 2023, after the price cuts, automotive gross profit margins projections fall anywhere from 17% to 22%. Operating profit estimates for 2023 now range from about $9 billion to $30 billion, according to FactSet. That’s a wide range, even for Tesla, and means the stock should face a lot of volatility in 2023. The $21 billion range for operating profit forecasts is about 140% of the $15 billion average estimate. At the start of 2022, the estimate range was roughly $13 billion, or about 100% of the average estimate. When Tesla reports Wednesday after the market close, investors will want an update about profit margins as well as production and sales. They will also want to see how the year ends. Wall Street projects earnings per share of about $1.13 from $24.7 billion in sales for the fourth quarter. Operating profit and free cash flow are projected to be $4.2 billion and $2.7 billion, respectively. Tesla earned $1.05 a share from $21.5 billion in sales in the third quarter of 2022. Operating profit and free cash flow came in at about $3.7 billion and $3.3 billion, respectively. Whatever Tesla reports, investors should be ready for trading volatility. Options markets imply the stock will move about 10%, up or down, following the earnings report. Shares have moved an average of about 8%, up or down, following the past four quarterly reports. Shares have risen twice and fallen twice over that span. Tesla stock has had a strong start to the year, up about 13% year to date. The S&P 500 and Dow Jones Industrial Average are up about 3% and 6%, respectively. Tesla stock is down 3.4% in early trading Wednesday. The Nasdaq Composite is off 2.2%. Write to Al Root at allen.root@dowjones.com