Tesla announced that it will release its Q2, 2022 earnings report after the closing bell on Wednesday, July 20.
Tesla Managed to Increase Sales Year-Over-Year
Earlier this month, Tesla announced another strong quarterly global production and sales results, achieved despite various challenges - including a lockdown in China and ramp-up issues at two new plants (in Texas and in Germany).
Q2 2022 does not bring new records, but the growth year-over-year is noticeable and it was the third-best quarter in the company's history. Interestingly, June 2022 was the top production month ever.
Tesla increased its overall electric car production in Q2 by about 25% year-over-year to 258,580.
The lion's share falls on theModel 3/Model Y - over 242,000. A good sign is that the refreshed Model S/Model X production continues to increase.
The total sales (customer deliveries) amounted to 254,695 (up 27% year-over-year), including over 238,000 Model 3/Model Y and over 16,000 Model S/Model X.
If the third quarter is not as eventful as the Q2, Tesla has a chance to return above 300,000 per quarter and actually set new records, especially since the plant in China is undergoing an upgrade.
Tesla Faces Near-Term Pressures
The easing of restrictions in China helped the company recover from significant disruptions caused earlier in the second quarter at its Shanghai facility. Tesla stated that it’s June vehicle production was the highest monthly figure in the company’s history.
With Tesla ramping up production, focus will now be on the company’s performance in the second half of the year.
Meanwhile, Tesla’s profitability is under pressure due to rising costs. As per a Reuter report, last month Musk expressed his concerns about the economy in a message sent to company executives. Musk stated that he had a “super bad feeling” about the company’s outlook and needs to slash about 10% of the company’s staff. Musk also stated that the company will pause hiring worldwide.
According toStockApps.com, Tesla is expected to report a $440 million impairment on its Bitcoin stock.
This year, Tesla recorded their Bitcoin holdings worth $1.26 billion in the first quarter, while its value in the market was around $1.96 billion.
Tesla’s bet on Bitcoin has come under increasing scrutiny in recent months as the price of the crypto currency has tumbled. Many other companies that have taken bets on Bitcoin have also been under pressure to justify their investments.
Cautious Bullishness from Analysts
Oppenheimer analyst Colin Ruschfeels that investors should consider production run rate and pricing dynamics over the short term as key drivers of revenue and gross margin under normalized operating conditions.
Rusch adds that COVID-19 restrictions in China along with production disruptions in certain geographies hit by the Russia-Ukraine war could continue to impact component availability. The analyst anticipates headwinds to be largely addressed by the fourth quarter, but wouldn’t be surprised by some pressure on margins in the meantime.
Rusch has a Buy rating on Tesla stock and remains bullish considering Tesla’s potential earnings leverage, technological leadership, and the recent pullback in the stock.
Overall, the Street is cautiously optimistic on the stock, with a Moderate Buy consensus rating based on 16 Buys, eight Holds, and six Sells. The average price target of $867.41 implies 23% upside potential from current levels.
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