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Tesla’s revenue jump 20%; Elon Musk Says ‘Autonomy’ Will Make Sliding Margins ‘Look Silly’




Tesla ( TSLA ) reported better-than-expected second-quarter financials late Wednesday, even as price cuts and vehicle discounts kept gross margins below the 20% “floor” Tesla has previously targeted. TSLA shares fell early Thursday.




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Tesla reported second-quarter profit rose 20% to 91 cents per share, while revenue rose 47% to $24.93 billion. Analysts expected profits to rise about 4% to 80 cents per share on revenue totaling $24.22 billion, up 43% from last year.

Meanwhile, total gross profit grew 7% to $4.53 billion. Total gross margins came in at 18.2%, down from 19.3% in Q1 and down 682 basis points compared to last year. Auto gross margins, excluding regulatory credits and leases, came in at 18.1%, down from 18.3% in Q1.

It is below the “floor” of 20% gross margin that Tesla had previously targeted. Ahead of earnings, a number of analysts rang warning bells on gross margins.

“The short-term variations in gross margins and profitability are really small compared to the long-term picture,” CEO Elon Musk told investors on Wednesday.

“Autonomy will make all these numbers look silly,” he added during the Q2 earnings call.

Tesla shares fell 4.3% early Thursday during premarket trading. Losses started during the earnings call on Wednesday. In regular trading Wednesday, TSLA fell 0.7% to 291.26.

Analysts focus on margins

Wedbush analyst Daniel Ives, a longtime Tesla bull, said the big focus is on auto gross margins “to gauge the impact of the price cuts and what this means for margins going forward.”

The Wedbush analyst wrote that he expected auto gross margins to be around 17.5%. However, Ives added gross margins “should ramp (up) over the coming quarters and back toward the 20% level by 2024.”

On Tuesday, Morgan Stanley analyst Adam Jonas joined the chorus of analysts who said margins are top of mind. The Morgan Stanley analyst said he had seen estimates as low as 16% to as high as 20% for Tesla’s second-quarter gross margin.

Ahead of earnings, Cathie Wood sold off tranches of the company’s Tesla stock in consecutive sessions, unloading more than 73,000 shares this week before the electric car giant reported second-quarter earnings on Wednesday.

Cybertruck sends Tesla shares higher

Tesla reported in its Q2 earnings report that the Cybertruck “remains on track to begin initial production later this year at the Gigafactory Texas.” However, the EV giant added that it is “testing Cybertruck vehicles around the world for final certification and validation.”

The company also said it continues to “make progress” on its next-generation platform.

“We’re excited to start delivering it later this year,” Musk told investors Wednesday, referring to the Cybertruck.

Over the weekend, Tesla tweeted a photo of the first Tesla Cybertruck made at the Austin factory. Tesla stock responded on Monday, jumping 3.2% to 290.38.

Morgan Stanley analyst Adam Jonas wrote on Tuesday “now that the first Cybertruck has rolled off the track in Texas, the fun can begin.”

TSLA shares rose 2.5% last week to 281.38, hitting a new 2,023 intraday high on Friday. Tesla is up 136% in 2023. Shares are working on a buy point at 313.80 from a deep consolidation back to late September, according to MarketSmith analysis.

Tesla stock: Global delivery record

TSLA reported record global shipments in early July — as price cuts, tax credits and rebates drove demand well above Wall Street forecasts.

Tesla deliveries ran to 466,140 in the second quarter, sprinting past Q1’s record 422,875 and Q4’s 405,278. Model 3 and Y deliveries reached 446,915 in Q2. Model S and X deliveries picked up to 19,225. Production reached 479,700, exceeding deliveries once again, even with Tesla limiting production below capacity.

Tesla’s global vehicle inventory was 16 days at the end of the second quarter, up one day sequentially and a 300% increase compared to last year.

Musk said Wednesday during the Q2 earnings call that the company is still targeting production of 1.8 million vehicles in 2023. Musk has now consistently downplayed the 2 million production figure he used at the end of Q4.

However, Musk added that third-quarter production will likely “be down a bit” due to summer shutdowns for factory upgrades.

On April 19, Tesla reported a big first-quarter revenue decline while earnings missed views. Profit margins for the global electric car giant fell below 20% as the company implemented an aggressive price-cutting strategy in the first part of 2023.

The EV company’s total gross profit came in at $4.5 billion in Q1. Tesla’s gross profit margin was 19.3%, down from 23.8% in the fourth quarter and 29.1% a year earlier.

Tesla shares rank third in IBD’s automaker industry group. It has a 98 Composite Rating out of 99. Tesla has a 96 Relative Strength Rating and EPS Rating is 93 out of 99.

Follow Kit Norton on Twitter @KitNorton for more coverage.

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