Tesla Revenue Jumps 20%, However Shares Fall After Hours Amid Revenue Considerations | Information
SAN FRANCISCO (AP) — Elon Musk’s big bet that Tesla price cuts could boost sales and profits amid increased competition and poor economic sentiment appears to be yielding mixed results. Sales soared and the company beat analysts’ expectations for net income in the April-June quarter, even as the company’s profit margins declined. Tesla shares followed suit in after-hours trading.
The Austin, Texas-based maker of electric vehicles, solar panels and batteries reported net income of $2.7 billion in the quarter, up 20% year over year. Earnings per share also rose 20% to 78 cents as measured using generally accepted accounting principles. Total revenue increased 47% to $24.93 billion.
However, analysts tend to focus on Tesla’s own earnings measure, which excludes stock-based compensation expense. Using that metric, Tesla’s net income rose to $3.15 billion, or 91 cents a share, comfortably beating the average analyst estimate of 80 cents a share, according to FactSet. Some analysts had expected falling profits due to the price cuts.
However, Tesla shares initially remained flat around $292 in after-hours trading immediately following the release of the earnings report, climbing slightly above its close of $291.26. As Tesla executives spoke to analysts on a conference call, shares plunged more than 4%.
Tesla reported strong vehicle shipment numbers on July 2, saying they were up 83% from the year-ago quarter after the company repeatedly slashed prices on its four electric vehicle models. Tesla sold a record 466,140 vehicles worldwide from April to June, almost double the same period last year (254,695).
The vast majority of these sales were for Tesla’s popular Model 3 sedans and Model Y crossover SUVs.
However, the earnings report delivered mixed messages on one of the larger questions facing Tesla: whether the automaker’s rebate strategy can increase sales while preserving its profit margins. Tesla’s operating margin, which measures how efficiently it converts sales into pre-tax profits, fell to 9.6% in the April-June quarter, a notable decline from 14.6% a year earlier. The key figure also fell sharply in the January-March quarter.
While profitability and pricing pressures continue to weigh on Tesla, Edward Jones analyst Jeff Windau said he found some comments from management on cost controls optimistic and said the company’s overall performance remains solid.
“The long-term drivers of growth remain and there will only be short-term headwinds in the current environment that we are in,” he said.
On the company’s conference call with analysts, Musk praised the company’s performance despite high interest rates and what he called significant economic uncertainty, then quickly switched to the topic of Tesla’s advanced projects like its so-called “full self-driving” software.
Despite the name, software-enabled Tesla cars can’t drive themselves, and the company warns drivers to be ready to intervene at all times. Musk praised Tesla’s work on a new machine learning system called Dojo, which the company plans to use to improve its self-driving software.
Musk also said Tesla should deliver its long-promised Cybertruck — an unusual-looking pickup truck with an angular design that couldn’t look out of place in a Mad Max movie — by the end of the year. Tesla announced on Saturday that the first Cybertruck had rolled off the assembly line.
However, analysts aren’t convinced the vehicle will be widely available anytime soon, not least because other automakers have already unveiled conventional-looking electric pickups like the Ford F-150 Lightning.
“I don’t think we’re going to see significant volume, especially this year,” said Seth Goldstein, an analyst at Morningstar Research. “Not even next year. Maybe we’ll be looking more to 2025, 26, 27 until we see them.”
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