By
Steve Muchoki
April 19th, 2024
Despite seeing its highest vehicle production month in history, Tesla also saw its automotive gross margin fall for the first time in a long while.
Shares of EV giant Tesla Inc (NASDAQ: TSLA) jumped in extended trading as the company beat analysts’ expectations in Q2 2022 despite the market conditions. The company released its quarterly financial result and shareholders’ letter after the market closed on the 20th of July. Analysts’ prediction on Tesla for Q2 2022 was $16.521 billion in revenue. Also, the Wall Street consensus for earnings per share was $1.81. These predictions were fueled by the fact that Tesla had to shut down its Gigafactory Shanghai.
Tesla in Q2 2022
Due to the forceful closure, the EV maker recorded around 250,000 deliveries instead of the expected total of over 300,000. However, Tesla has remained afloat, exceeding revenue and earnings expectations for 2022 Q2. Wedbush analysts Dan Ives noted that Tesla seems to be approaching delivering 1.4 million units this year.
Tesla posted revenue of $16.934 billion for the 2022 Q2, representing a 42% increase YoY. Also, adjusted earnings per share were $2.27, higher than the expected $1.81, according to Refinitiv. In reaction to the 2022 Q2 financial report, Tesla recorded a 3% gain. At press time, however, the company is up 1.45% in after-hours trading to $753.30.
In a statement, the automaker acknowledged that it experienced challenges during the last quarter. However, it came out strong.
“We continued to make significant progress across the business during the second quarter of 2022. Though we faced certain challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, we achieved an operating margin among the highest in the industry of 14.6%, positive free cash flow of $621M and ended the quarter with the highest vehicle production month in our history.”
Despite seeing its highest vehicle production month in history, Tesla also saw its automotive gross margin fall for the first time in a long while. The automotive gross margin was 27.9% in the quarterly financial report. Meanwhile, it came in at 32.9% in the previous quarter and 18.4% in 2021 Q2. The automaker struggled with automotive gross margin due to inflation and increased competition for battery cells and other supplies required for EV production.
Tesla Coverts 75% Bitcoin Holdings to Cash
Furthermore, Tesla revealed that it sold 75% of its Bitcoin holdings in Q2 of 2022. As a result of the crypto conversion to fiat currency, the company added $936 million in cash to its balance sheet. CEO Elon Musk explained that the EV giant sold BTC because it was not sure when China would ease its lockdowns. He added that it was important for the company to “maximize” its “cash position.”
Despite the inflation, lockdowns, and factory closure, TSLA has managed to add 4.83% over the past month. The company’s stock is also up 4.41% in the last five days, amassing more than 13% in the last twelve months.