Tesla Tops Q2 Earnings Forecast, But Profit Margins Narrow; Dumps Nearly 1 Billion In Bitcoin

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Updated at 4:52 pm EST

Tesla  (TSLA) – Get Tesla Inc. Report posted stronger-than-expected second quarter earnings Wednesday, although its profit margins narrowed amid surging input costs, sending shares lower in after-hours trading. 

Tesla said adjusted earnings for the three months ending in June were pegged at $2.27 per share, up 56.5% from the same period last year and firmly ahead of the Street consensus forecast of $1.86 per share.

Group revenues, Tesla said, rose 41% from last year to $16.94 billion, falling shy of analysts’ forecasts of a $17.2 billion tally and the record $18.76 billon notched over the first quarter.

Gross automotive margins were 27.9%, a 500 basis point decline from last year, Tesla said, just inside the Street forecast of 28.2%, owing to put a surge in input costs and expenses linked to the ramp-up of new factories in Austin and Berlin. Stripping away the impact of emissions credit sales, automotive margins were pegged at 26.2%, even as the average selling price of a Tesla vehicle rose 5%. 

“We continued to make significant progress across the business during the second quarter of 2022,” Tesla said. “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 $621 million and ended the quarter with the highest vehicle production month in our history.”

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Tesla shares were marked 0.75% lower in after-hours trading immediately following the earnings release to indicate a Thursday opening bell price of $737.01 each. 

Tesla also said it sold around 75% of it bitcoin holdings by the end of the second quarter, a figure equal to around $936 million, which was added to its balance sheet. 

Estimates of Tesla’s bitcoin carrying costs vary, but the timing of the purchase suggests a level of around $32,600. That value, of course, surged in the latter half of 2021, when bitcoin hit an all-time high of around $67,000, but now looks far more fragile after crashing below the $20,000 level last month.

Bitcoin prices were last seen 2% lower on the day at $23,020 each following news of the Tesla sale. 

Tesla, which suffered through supply chain disruptions, chip shortages and a 22-day shutdown at its gigafactory in Shanghai over the three months ending in June, saw deliveries fall 17.7% from the previous period to a a weaker-than-expected 254,695 units.

Raw materials prices, as well as labor costs linked to overall production cycles, have risen steadily over the past year, while Nickel– a crucial component in EV battery making — is up around 20% at $21,200 per ton on the London Metals Exchange. Battery-grade lithium carbonate prices are up around 60% from early 2021 levels.

Tesla told investors in April that “the inflationary impact on our cost structure has contributed to adjustments in our product pricing, despite a continued focus on reducing our manufacturing costs where possible”, and has since initiated layoffs in California while boosting prices for its Model S and Model Y sedans.