Tesla tracks higher after investors size up margin crunch, deliveries update
Justin Sullivan
Tesla (NASDAQ:TSLA) moved higher in after-hours trading on Wednesday after topping revenue and EPS marks with its Q2 earnings report.
The Austin-based company generated $2.4B in GAAP net income during the quarter and $2.7B in non-GAAP net income.
Tesla (TSLA) delivered 466,140 electric vehicles in the second quarter and produced 479,700 vehicles. Last year, Tesla (TSLA) delivered 254,695 vehicles during Q2 and the Austin-based automaker delivered 422,875 vehicles in Q1 of this year.
Operating margin came in at 9.6% of sales to fall from last quarter's mark of 11.4%. Reduced ASP due to mix and pricing was a drag on the margin line. Other factors impacting profitability were the cost of production ramp of 4680 cells, an increase in operating expenses driven by Cybertruck, AI and other large projects, and negative FX impact. Total GAAP gross margin was 18.2% compared to 25.0% a year ago and 19.3% in the prior quarter. Analysts had forecast a gross margin rate of 18.7% for the quarter. CFO Zachary Kirkhorn had stated early in the year that FY23 automotive gross margin should remain above 20% with average selling prices in the high $40K range, but a round of pricing cuts has altered the margin story.
Solar deployed fell 38% year-over-year to 6g MW. Storage deployed was up 222% year-over-year to 3,653 MWh.
Business update: Tesla (TSLA) said it is focusing on cost reduction, new product development that will enable future growth, investments in R&D, better vehicle financing options, continuous product improvement and generation of free cash flow. For 2023, TSLA expects to remain ahead of the long-term 50% CAGR with around 1.8M vehicles for the year vs. 1.88M consensus estimate. The Cybertruck model is being tested around the world and is on track for an initial production run this year.
Tesla (TSLA) ended the quarter with a cash position of $23.1B (+22% year-over-year), driven by free cash flow of $1.0BM (+62% year-over-year).
Early analyst take: Ahead of the report, New Street Research analyst Pierre Ferragu advised that the Q2 margin number should be the trough, even if further price cuts are announced. He said underlying costs are improving fast due to the production ramp in Berlin and Austin.
Shares of Tesla (TSLA) tracked 0.55% higher in after-hours trading to $288.19 after shedding 0.73% during the regular session. The 52-week high for Tesla is $314.67. The TSLA conference call is scheduled for 5:30 p.m. ET and could feature more color on pricing and demand trends
Sector peers in after-hours trading: Lucid Motors (LCID) -0.28%, Fisker (FSR) -0.13%, Rivian Automotive (RIVN) -0.55%, General Motors (GM) +0.10%, Ford (F) -0.09%.
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