Tesla
Inside the Numbers
In Q2, Tesla reported $1.45 in earnings per share which were almost 50% higher than analysts' expectations of $0.98 per share. This translates to a net income of $1.1 billion which is a marked improvement from $104 million in 2020's Q2. Revenue came in at $11.96 billion, beating expectations of $11.30 billion.
In total, automotive revenue was $10.2 billion for the quarter with $354 million of it coming from the sale of regulatory credits. For many years, Tesla was reliant on these credits but due to higher production, this is becoming a part of the business rather than the whole business. Another positive was automotive gross margins coming in at 28.4% which is the highest in many quarters.
It produced 206,421 vehicles in the quarter and delivered 201,250. The company has faced some production issues due to the chip crunch like many auto companies. It's also faced some scrutiny for failing to deliver on CEO Elon Musk's promises about the rollout of its full self-driving feature.
Tesla's energy business contributed $801 million in revenue which includes solar installations and energy storage systems. This is a 60% improvement from last quarter as the company benefited from the economy's reopening. According to Musk, the company has demand for about 80,000 Powerwall units this quarter but would only be able to produce around 35,000 due to the chip shortage.
Services and other revenue contributed $951 million in revenue which encompasses its stores, service centers, and its mobile service fleet. Tesla will need to continue investing in servicing and maintaining vehicles as its deliveries grow and has faced criticism from some customers for shoddy and delayed service calls.
Stock Price Outlook
After being a market leader and momentum darling in 2020, Tesla has been pretty placid in 2021. The stock is off by nearly 30% from it's all-time high that it set in January. It's also up 20% from its mid-May low.
While growth stocks have underperformed for many months, it's increasingly clear that conditions are improving for them especially with the plunge in rates and falling growth expectations. Therefore, investors should maintain a constructive stance on the stock especially as its recent earnings report shows that the company's momentum and trajectory remain on track.
