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Earnings

Tesla share price closes higher alongside record Q2 numbers

Two Tesla vehicles in a showroom.

Since entering the S&P 500 on 21 December 2020 at $666, Tesla’s share price has just about managed to hold on to the upward momentum in place since the beginning of 2020, when the shares were down at the lowly levels of $83.

Last night, Tesla's share price closed higher ahead of their latest Q2 numbers, which came in ahead of expectations when they were released after the bell. We already know that deliveries rose above 200k for the first time in the second quarter, easily beating the 185k deliveries in Q1.

Tesla share price helped by strong Q2 numbers 

Q2 revenues came in at $11.96bn, well above expectations of $11.36bn, while profits came in at $1.45c a share, beating consensus expectations of $0.97c.

The company was also able to come in cashflow positive to the tune of $619m, despite the challenges being faced by supply chain constraints, with operating margins rising to 11% from 5.7% in Q1.  

Tesla said it remained on track to build its Model Y SUV in Berlin and Austin, despite the recent snags currently delaying progress at the German plant. However, it admitted it would have to push back its Cybertruck launch to 2022.    

Some of the challenges ahead for Tesla

There were some headwinds in the Q2 numbers, notably a rise in supply chain costs, a reduction in revenue from regulatory credits ($354m, down from $518m in Q1), and a $23m bitcoin-related impairment, which could impact Tesla's share price in the coming months. 

Given the recent problems in China after the country's regulator ordered the company to fix a safety issue on the autopilot, there was little sign of a slowdown there, with Tesla saying that rising global demand has prompted them to transition to the China Gigafactory as the company’s primary export hub until Austin and Berlin are ready to go.

Hopefully this won’t be problematic for Tesla if US-Chinese relations deteriorate further, and the company keeps itself onside with regulators.

In terms of guidance, Tesla said they expected to achieve 50% annual growth in vehicle deliveries, and that operating margins will continue to improve, along with efficiencies.

Current vehicle annual capacity stands at 100k for Model S / Model X, and 500k for Model 3 / Model Y in California, with Shanghai at circa 450k for Model 3 / Model Y, with Berlin and Texas set to produce the Model Y once finished.

All in all, there was little to find wrong with the numbers, with net income coming in at a record $1bn, and a positive outlook heading into the second half, with the Tesla share price edging higher in after-hours trading.


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