Tesla Earnings Deep Dive (9.7% drop!)

Thursday, Tesla stock took a big hit after their earnings report shook some investors. The main concerns are tightening margins and a warning that Q3 production could be down slightly, but let’s take a look at the numbers.

Financials and production

Tesla's Q2 gross margins were 18.2%, below analyst expectations of 18.8%.
The company's operating margin fell under 10% to 9.6%, nearly 5% lower than a year ago.
Tesla maintains its target of 1.8 million vehicle deliveries for the year.
Tesla's Q2 revenue was reported at $24.9 billion, surpassing the expected $24.51 billion.
The company's adjusted EPS was $0.91, exceeding the anticipated $0.81.
Tesla's Q2 revenue showed a minor gain from Q1 and a 45% increase from a year ago.
The company reported an adjusted net income of $3.1 billion, more than the predicted $2.87 billion and Q1's $2.9 billion.
Analyst predictions put Tesla's 2023 production between 1.7 million to 2 million vehicles, which would account for 2%-2.5% of global light vehicle market share, or 17.5%-25% of the global EV market.
Tesla's total gross profit for Q2 2023 was slightly above $4.5 billion, marking a 7% increase from Q2 2022.
Tesla vehicle production and deliveries surged by 86% and 83% respectively, in Q2 2023 compared to Q2 2022.
The "net cash provided by operating activities" rose to $3.065 billion, a 30% increase from Q2 2022.
Capital expenditures rose by 19% from Q2 2022, reaching $2.060 billion.
Tesla's free cash flow was $1.005 billion, marking a 62% increase from Q2 2022, while cash, cash equivalents, and investments hit a record $23.075 billion, a 22% increase year-over-year.
Tesla reported strong sales and revenues for Q2 2023, building 479,700 EVs and delivering 466,140, bringing in $21.3 billion in revenue, a 46% YoY increase.
Tesla's solar panel and battery storage business saw the largest increase, growing 74% YoY to $1.5 billion, despite fewer GWh of storage deployed for Q2 vs Q1 2023. The 3.7 GWh deployment represents a 222% YoY increase.
Growth in the EV sector is projected to continue at a 23.6% CAGR through 2025, while ICE growth is predicted to remain flat.

Musk comments

CEO Elon Musk hinted that Q3 production might drop slightly due to factory upgrades during summer shutdowns.
Musk stated that sacrificing margins to produce more vehicles is sensible in the long term.

Self Driving

The company is in early talks with a major OEM for licensing its full-self driving (FSD) software.
Despite past overstatements, Elon Musk promises a functional Full Self-Driving (FSD) system by the end of 2023.
Musk claimed that another automaker is in early discussions with Tesla to license the controversial FSD system for its own vehicles.

Cybertruck

Tesla is installing Cybertruck equipment at its gigafactory in Austin, Texas, with production and customer deliveries to commence "later this year."
Musk warned of challenges in ramping up production of new models but claimed Cybertruck deliveries would begin in 2023, with deliveries at scale commencing the following year.
Musk declared that demand for the Cybertruck is extremely high.
Tesla currently has nearly 50,000 Supercharger connectors and over 5,000 stations worldwide.

Stock performance

Tesla stock (TSLA) fell 9.7% on Thursday, the worst single-day loss since April.
Tesla's stock had rallied over 130% this year prior to earnings.
Wedbush analyst Dan Ives increased his price target to $350 for the stock.
Analysts generally perceived the report and earnings call as lacking major surprises and performing better than expected.
Tesla remains one of the biggest long holdings for many investment firms, with strong delivery numbers affirming its position.
Tesla holds a significant market lead in the U.S., despite facing competition in China.

Technicals

Tesla was oversold on RSI prior to earnings
We had seen RSI divergence in Tesla, with lower highs on RSI as the stock price reached higher highs
The NASDAQ has been rallying alongside Tesla and also saw a strong move down on Thursday, suggesting the possibility of short-term top for both.

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