Tesla Inc. late Wednesday reported second-quarter earnings and sales that topped Wall Street’s expectations and kept intact its 2023 goal of making about 1.8 million vehicles this year, but the stock headed lower as results didn’t quite match expectations of a blowout quarter.
Losses for the shares accelerated after Chief Executive Elon Musk warned investors to expect “slightly” lower production in the current quarter due to factories that need to undergo upgrades. At last check, Tesla shares were down 4.3% in after-hours trading.
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earned $2.7 billion, or 78 cents a share, in the quarter, compared with $2.3 billion, or 65 cents a share, in the year-ago period. Adjusted for one-time items, the EV maker earned 91 cents a share.
Revenue rose 47% to $24.9 billion.
Analysts polled by FactSet expected Tesla to report adjusted earnings of 80 cents a share on sales of $24.2 billion.
In a call with analysts after the results, Musk said demand for the Cybertruck, Tesla’s electric pickup expected to be available later this year, “is so off the hook you can’t even see the hook.”
Musk used the word “turbulent” to describe the global economic background, but said that he has “high confidence in the long-term value of Tesla.”
Tesla’s bottom-line beat was “fairly sizeable,” CFRA analyst Garrett Nelson said in an interview with MarketWatch. But “this was sort of an uneventful release with no change to prior 2023 volume guidance,” he said.
“The truth is that the bar had been set pretty high heading into this release given Tesla’s meteoric run-up so far in 2023,” Nelson said. Tesla shares have more than doubled thus far in the year.
Tesla’s gross margins, another perennial preoccupation for Tesla investors in the face of several price cuts this year, were worse than expected at 18.2%, compared with consensus around 18.8%, and 25% in the second quarter of 2022, he added.
During the call with analysts, Tesla Chief Financial Officer Zach Kirkhorn called the margin drop “modest.”
The factory upgrades will carry “some amount of factory idle cost,” but Tesla is working to minimize these costs as much as possible, Kirkhorn said.
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Tesla delivered a “Goldilocks” second quarter, Wedbush analyst Dan Ives said in a note late Wednesday. Margins were better than feared despite the “aggressive” price cuts, he said.
Operating margins and revenue dropped to 9.6%, from operating margins of 11% in the first quarter.
Tesla called them “healthy” even with the price cuts the auto maker went for earlier in the year, and said the margins reflected “ongoing cost reduction efforts”; the production ramp in the Berlin, Germany, and Texas factories; and the “strong performance” of its energy and services businesses.
Tesla is focusing on “cost reduction, new product development that will enable future growth, investments in R&D, better vehicle financing options, continuous product improvement and generation of free cash flow,” executives said in a letter to shareholders accompanying results.
“The challenges of these uncertain times are not over, but we believe we have the right ingredients for the long-term success of the business through a variety of high-potential projects,” the letter said.
Tesla earlier this month reported second-quarter deliveries, its proxy for sales, well above Wall Street expectations, sparking another rally for the stock. Tesla has gained 137% so far this year, compared with gains of around 19% for the S&P 500 index
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