To The Moon

$Tesla Motors(TSLA)$ released its Q2 earnings report yesterday, and its stock plummeted by 7.77% in after-hours trading!

In terms of performance, Tesla's Q2 results were commendable. Revenue reached $25.5 billion, up 2.3% year-over-year, surpassing analysts' expectations of $24.63 billion:

Segments Revenue

• Automotive revenue was $19.878 billion, down 6.5% year-over-year, slightly beating analysts' forecast of $19.77 billion;

• Energy revenue was $3.014 billion, up a whopping 99.7%, far exceeding analysts' expectation of $2.36 billion;

• Services and Other revenue was $2.6 billion, up 21.3%, slightly surpassing analysts' expectation of $2.46 billion.

Automotive revenue mainly came from vehicle sales, leasing, and carbon credits. Among,

1. Vehicle sales revenue in Q2 was $18.53 billion, below analysts' expectation of $18.83 billion;

2. Leasing income was $458 million, also below analysts' expectation of $540 million;

3. Carbon credits performed exceptionally well, generating $890 million in revenue, well above analysts' forecast of $409 million.

The poor vehicle sales were within market expectations, with Q2 deliveries totaling 440,000 vehicles, down 4.8% year-over-year:

To boost sales, Tesla heavily promoted its vehicles, resulting in per-vehicle revenue dropping to $41,700, marking the sixth consecutive quarter of decline:

Gross Margin

Gross margin for Q2 was 18%, slightly down from 18.2% in the same period last year, with adjusted net margin showing signs of stabilization, reaching 7.7%:

By segment, Automotive gross margin was 18.5%, flat compared to Q1; Energy gross margin was 24.55%, also flat quarter-over-quarter; Services and Other business gross margin was 6.4%, showing significant improvement:

Future Outlook

Looking ahead, Automotive sales are expected to increase quarter-over-quarter, but the growth rate for 2024 will be significantly lower than in 2023. Energy-related business may experience noticeable fluctuations, while Service business is expected to remain stable.

In terms of bettery electric market share, China is recovering momentum, while other countries are underperforming, posing ongoing sales pressure for Tesla:

With no relief from vehicle revenue, Musk's strategy is to paint a rosy future, like affordable cars, autonomous taxis, robots, and AI.

During the Q2 earnings call, Tesla delayed the launch of its Robotaxi to October 10 and expects affordable cars to start production no earlier than the first half of next year. The rhetoric on robots and AI remains consistent with previous statements.

Moreover, Musk announced during the call the suspension of investment in the Mexican factory, citing potential increased tariffs under a Trump re-election. If implemented, Tesla's plans for a Mexican factory would lose significance.

This poured cold water on the market's hot expectations and was a major reason for the stock's sharp decline!

Tesla's future hopes are now pinned on AI, relying heavily on conceptual support. The significant volatility in its stock price thus becomes understandable!