Tesla Revenue & Earnings Beat Wall Street Expectations — Yet Stock Dropped Off Cliff

Tesla held its Q2 earnings call on Wednesday, during which CEO Elon Musk and other executives reported financials such as earnings, revenue, and profits for the quarter. In addition to beating Wall Street estimates on both revenue and earnings, Musk also revealed a few pieces of news, including a noteworthy update on Full Self-Driving (FSD) software and what investors can expect for the third quarter of the year.

A Tesla Model Y at a Supercharger. Image by Casey Murphy / EVANNEX.

The Q2 earnings call included Tesla executives including Musk, Martin Viecha, Zachary Kirkhorn, and others. Let’s take a look at the various topics Tesla discussed during its second-quarter earnings call.

Financial Details

On the call, Tesla reported $24.9 billion in second-quarter revenue, beating Wall Street forecasts of roughly $24.51 billion, as Yahoo Finance reports. The automaker reported an adjusted earnings per share of $0.91, though estimates landed at just $0.81. The increase represents a 45-percent jump from the same quarter last year, and a small increase from the first quarter.

With the recent wave of price cuts, many were also highly anticipating the company’s profit margins. Tesla reported $3.1 billion in adjusted net income, additionally surpassing Wall Street estimates of $2.87 billion. Still, the company’s gross margin in the second quarter fell to 18.2 percent, under analyst forecasts of 18.8 percent, and the automaker’s operating margin dropped to 9.6 percent.

“Our operating margin remained healthy at approximately 10%, even with price reductions in Q1 and early Q2,” Tesla said. “This reflects our ongoing cost reduction efforts, the continued production ramp success in Berlin and Texas and the strong performance of our Energy and Services & Other businesses.”

During the call, Musk also reiterated reaching production and delivery records in Q2, after Tesla reported 479,000 units produced and 466,140 units delivered earlier this month. The delivery figure beat the Wall Street consensus of just 448,599 deliveries. Despite this, Musk also predicted that production would fall slightly in the third quarter, largely due to factory upgrades that would require machine downtime.

Licensing Tesla FSD Software to Other OEMs

Regarding news from the call, there was an update on potentially licensing the FSD software, something Musk has discussed in the past. Musk said on the call that Tesla was open to licensing its FSD software, even saying that the company was already in “early discussions with a major OEM” about it.

“We are very open to licensing our Self-Driving software and hardware to other car companies,” Musk said. “And we are already in discussions with, only just early discussions, with a major OEM about using the Tesla FSD. So we’re not trying to keep this to ourselves, we’re more than happy to license it to others.”

FSD Transferability

Musk also announced that Tesla will be allowing a one-time transferability option in the third quarter to let users transfer their FSD beta to a new Tesla. He added that this would be a one-time thing, so Tesla owners looking to upgrade will need to take advantage of it once it becomes available.

Cybertruck Update

One investor asked when Tesla will offer up additional information about Cybertruck orders, delivery schedules, pricing, and specs. Musk responded saying that demand itself was “so far off the hook, you can’t even see the hook.” Without giving too many tangible details, he did say that the vehicle has a lot of new technology making the production ramp difficult, along with sharing a few rough specs.

“As far as we know, Cybertruck will be the first sub-19-foot truck (fitting into a garage) that has both four doors and 6-plus-foot bed,” Musk said. “Both technologically and architecturally, this vehicle will break a lot of boundaries, very much in line with how we think about vehicle engineering and manufacturing.”

Supercharger Network Update

Musk also said that Tesla’s global Supercharger network has reached roughly 50,000 connectors at more than 5,000 stations, also emphasizing its recent charging partnerships with Ford, GM, Mercedes-Benz, and others to share its charging hardware.

Optimus Update

When asked how many Tesla Optimus humanoid robots had been made and when they’d start performing useful tasks, Musk said the company had now built around 10 of them. He also explained that the actuators needed for a humanoid robot were not available off the shelf from suppliers, so Tesla has been designing its own. As for when they’d be able to perform useful tasks, Musk reiterated plans to first use them in the company’s own factories, which he predicts could start sometime next year.

Tesla also shared details on a number of other topics during the Q2 2023 earnings call, and you can listen to the full call below.

Sources: Tesla (via YouTube) / Yahoo Finance

Article from EVANNEX.

Editor’s note: Despite beating revenue and earnings expectations, Tesla stock has dropped nearly 10% this week. Though, as noted above, Tesla’s gross margin figure was a bit below Wall Street expectations. Also, Tesla seems to have always followed the “buy the rumor, sell the news” trend when it comes to quarterly shareholder conference calls. So, it’s hard to guess exactly what shareholders are responding to.