Tesla Stock Earnings: TSLA loses 4.2% afterhours despite double beat as gross margin slides

Tesla reported Q2 earnings late Wednesday that beat the analyst consensus.
Q2 adjusted EPS arrived at $0.91 for the carmaker.
Elon Musk's company reported revenue of $24.93 billion.
Revenue rose 47% from the same quarter a year ago.
Gross margin dropped to 18.2% in the second quarter.

Clay Webster FXStreet

Tesla (TSLA) stock slid 4.2% afterhours to $279.07 on Wednesday evening as the electric vehicle industry's first-mover saw its gross margin slip to 18.2% in the second quarter. Analysts held a consensus going into Q2 that Tesla would retain a gross margin of 18.8% in its automotive division. Tesla's gross margin was down about 7 percentage points from a year ago.

CFO Zachary Kirkhorn said at the beginning of the year that Tesla was aiming to keep its autmotive gross margin at or above 20%. Since then Tesla has cut prices across its offerings several times in a bid to boost market share.

Tesla still beat Wall Street expectations on the top and bottom lines for the second quarter however. Tesla reported $0.91 in adjusted earnings per share (EPS), while revenue arrived at $24.93 billion. The earnings figure beat analyst consensus by 9 cents, and revenue bested the average forecast by about $200 million.

Free cash flow rose from $441 million in Q1 to circa $1 billion in the second quarter. Capital expenditures of $2.06 billion were largely in line with the first quarter.

In early July, the Elon Musk-run company already released data showing 466,140 deliveries in the second quarter, a 10% gain on the first quarter. While deliveries rose 83% YoY in Q2, revenue rose just 47% due to tighter margins.

TSLA daily chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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