Earnings report sharing/Tesla's EPS fell short of expectations!? Stock price took a hit?

$Tesla(TSLA.US) announced its Q2 earnings report on July 22. The data showed that revenue ended three consecutive quarters of missing expectations, coming in higher than the expected $24.77 billion, but EPS fell short of market expectations. The stock price dropped over 6% in after-hours trading! What other data should we pay attention to? Let’s take a look together～

Q2, 2024

Revenue increased 2% year-over-year to $25.5 billion, higher than the market expectation of $24.77 billion;

Breakdown by segment:

Automotive sales: $18.99 billion, accounting for the majority of total revenue;

Carbon credit sales: $890 million, about 3.5% of total revenue;

Energy generation and storage: $3.014 billion;

Services and other revenue, including out-of-warranty vehicle repairs, etc.: $2.608 billion, up 21% year-over-year;

EPS decreased 43% year-over-year to $0.52, lower than the market expectation of $0.62;

Gross margin decreased 0.2 percentage points year-over-year to 18%, higher than the market expectation of 17.6%;

Operating profit decreased 33% year-over-year to $1.605 billion, with an operating margin of 6.3%, compared to 9.3% in the same period last year, but slightly improved from 5.5% in the previous quarter;

Non-GAAP net profit was $1.812 billion, down 42% year-over-year;

Free cash flow was $1.342 billion, compared to the market expectation of $1.9 billion;

Deliveries decreased 5% year-over-year to 444,000, higher than the market expectation of 439,000;

Global days of supply for vehicles in Q2 increased from 16 days last year to 18 days, but improved from 28 days in the previous quarter;

Future Expectations

EV sales growth in 2024 may be significantly lower than in 2023, with no specific delivery target provided;

Energy storage business growth is expected to outpace automotive business growth;

Summary

This quarter’s revenue returned to positive growth and exceeded market expectations, driven mainly by pickup deliveries, energy business growth, carbon credit sales growth, and other business growth, partially offset by lower deliveries and average selling price (ASP). Notably, energy generation and storage revenue more than doubled year-over-year to over $3 billion, exceeding 10% of total revenue for the first time. Services and other revenue also performed well, up 21% year-over-year. These two segments showed strong growth but still account for a significantly smaller portion of revenue compared to automotive sales.

Inventory-wise, deliveries increased 15% quarter-over-quarter to 444,000 units, while first-half deliveries decreased 6.6% year-over-year to 830,800 units. Production decreased 14% quarter-over-quarter to 410,800 units, with production again falling below deliveries, indicating slight inventory improvement and reduced pressure for price cuts.

Gross margin for the company was 18%, up from 17.4% last quarter but down from 18.2% year-over-year. Based on automotive sales divided by deliveries, the average selling price per vehicle was $41,738, down from $43,804 year-over-year and $42,553 last quarter. Gross profit per vehicle declined by about a quarter year-over-year, but Tesla stated it will continue to improve cost savings by reducing costs in every step from production to delivery, improving cost of goods sold per vehicle, and accelerating AI product and service development to enhance affordability.

Finally, regarding future direction, Tesla mentioned that its next-generation vehicle, expected to be a $25,000 mass-market car, has been in development for a while and is slated for production in the first half of 2025. For FSD, Tesla stated its technology is ahead of competitors and faces fewer regulatory hurdles in the U.S. and other markets, with approval expected in China, Europe, and other regions by year-end. ROBOTAXI has been delayed to October 10. For robotics, Tesla introduced its second-generation robot last year, featuring more advanced AI and Tesla-designed actuators, which is already performing battery-handling tasks in one of its factories. Small-scale production for internal use is expected in 2025, with mass production and external availability targeted for 2026. Despite the post-earnings drop, Tesla’s stock price remains relatively high compared to peers, reflecting market optimism about ROBOTAXI, FSD, and robotics. However, if future performance falls short of expectations, the stock may face valuation pressure.

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