Tesla earnings: EV maker reports Q2 revenue and earnings beat; Musk says Q3 production will decrease slightly

Tesla stock (TSLA) is down after the bell as the electric vehicle maker reported a revenue and earnings beat, but margins that came in below expectations. Tesla CEO Elon Musk also indicated that Q3 production would be down slightly compared to the prior quarter.

For the quarter, Tesla reported Q2 revenue of $24.9 billion, topping street estimates of $24.51 billion, with adjusted EPS coming in at $0.91, compared to estimates of $0.81. That revenue figure represents a slight gain from Q1 and a gain of over 45% from a year ago.

On the profitability end, Tesla reported adjusted net income of $3.1 billion, compared to estimates of $2.87 billion and more than the $2.9 billion adjusted net income from Q1.

Tesla’s closely watched Q2 gross margin came in at 18.2%, below analyst expectations of 18.8%. In Q1, Tesla’s gross margin was 19.3%, which was down from Q4’s 24%. Tesla’s operating margin fell below 10% to 9.6%, which is nearly 5% (493 basis points) below what it was a year ago.

“Our operating margin remained healthy at approximately 10%, even with price reductions in Q1 and early Q2. This reflects our ongoing cost reduction efforts, the continued production ramp success in Berlin and Texas and the strong performance of our Energy and Services & Other businesses,” the company said in a statement.

However that wasn’t the entire story on margins. “The all-important automotive gross margins ex credits came in at 18.1% which was above the Street’s estimate of 18.0% and whisper numbers of ~17.5% as we believe Tesla is seeing steady demand post price cuts in the US and China with margins now in stabilization mode that should bottom over the next 1-2 quarters,” Wedbush analyst Dan Ives wrote in a note.

Tesla also reported that it was working on Cybertruck equipment installation at its gigafactory in Austin, Texas, with initial production slated to begin “later this year” along with initial customer deliveries.

However, in terms of overall production CEO Elon Musk said on the conference call that Q3 production would decrease slightly due to downtime stemming from factory upgrades.

Tesla co-founder and CEO Elon Musk introduces the newly unveiled all-electric battery-powered Tesla Cybertruck at Tesla Design Center in Hawthorne, California, on November 21, 2019. (Photo by FREDERIC J. BROWN/AFP via Getty Images)

In terms of other services, Musk revealed Tesla now has close to 50,000 Supercharger connectors, and over 5000 stations globally. Musk also disclosed the company is in early discussions with a “major OEM” regarding licensing full-self driving (FSD) software.

Over the last three months, Tesla stock has jumped a whopping 58%, adding over $100 to its share price for investors riding the boom. Charging deals with legacy automakers, a massive run-up in AI-related stocks that roped Tesla in, and strong production and delivery numbers for Q2 pulled Tesla stock higher and led to analyst after analyst pulling their price targets higher. This weekend’s news that Giga Austin built its first production Cybertruck gave the stock a boost on Monday.

Earlier this month Tesla reported Q2 global production of 479,700 units, with deliveries of 466,140. The delivery figure easily topped Wall Street consensus estimates of 448,599 units as well as the prior quarter’s total of 422,875. Both production and delivery totals for the second quarter were all-time records for Tesla.

This story is developing.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Source link