Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Tesla share price stalls despite profits beat

Tesla share price: a Tesla car is parked in front of a Tesla factory.

Since hitting its lowest level this year in May, Tesla’s share price has traded sideways. This has mainly been due to uncertainty about the impact of lockdown restrictions in China, a key manufacturing base for the company, raising fears over output, revenue and costs.

Profits beat estimates in Q2

Wednesday's Q2 results showed that operating margins took a hit, dropping to 27.9% from 32.9% in Q1. Revenue came in at $16.9bn, down from $18.76bn in the previous quarter, and also below what we saw in Q4 last year.

However, profits surprised to the upside, coming in at $2.27 a share, well above estimates of $1.83 a share. Tesla took an impairment on its bitcoin holdings after it disposed of 75% of its holdings in the cryptocurrency. This added $936m to its balance sheet. The company's solar unit also had one of its best quarters to date.

Vehicle deliveries in Q2 fell to 255,000, though in terms of production Tesla said it had its best month ever in June.

Vehicle delivery target hangs in the balance

Having delivered 565,000 vehicles in the first half of the year, the focus is now on the next six months as the electric car company seeks to hit its 2022 target of delivering 1.3m vehicles.

Much 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 for a “record” second half as it looks to increase maximum output at all four of its factories. This will be a key challenge for the business, as Musk acknowledged.

Investors were unsure what to make of last night’s results, as the stock's initial gains of 4% in after-hours trading soon fell away.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.