Tesla (TSLA Stock) share price stalls despite profits beat
Since hitting their lowest levels this year in May, Tesla’s share price has traded sideways given uncertainty about the impact of the lockdowns and restrictions in China, on its output, revenue as well as its cost base.
Operating margins did take a hit, dropping to 27.9%, down from 32.9% in Q1, while revenues came in at $16.9bn, down from $18.76bn in the previous quarter, and also below what we saw in Q4 last year.
Profits did surprise to the upside, coming in at $2.27c a share, well above estimates of $1.83c a share, despite taking an impairment on its bitcoin holdings, after the decision was taken to dispose 75% of them, adding $936m to its balance sheet. It was also helped by one of its best quarters for solar.
Total deliveries in Q2 fell to 255k, however in terms of production Tesla said it posted its best month ever in June.
With H1 firmly behind it and deliveries of 565k over the last 6 months, it’s all about the second half of the year if the electric car company wants to hit its target of 1.3m deliveries.
This will depend on Tesla’s ability to ramp up production at its new Austin and Berlin factories in the coming months.
CEO Elon Musk said that Tesla is on course set up for a “record” second half as it looks to increase maximum output at all four of its factories. This will be the key challenge for the electric car company as Musk himself acknowledged when he said that production was the main issue facing the business.
Investors weren’t sure what to make of last night’s results with initial gains after hours soon giving way to a modest decline.
Author
Michael Hewson MSTA CFTe
Independent Analyst
Award winning technical analyst, trader and market commentator. In my many years in the business I’ve been passionate about delivering education to retail traders, as well as other financial professionals. Visit my Substack here.
