Tesla blasts second-quarter profit forecast, but profit margins shrink

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Updated 4:52 PM EST

You’re here (TSLA) – Get the report from Tesla Inc. reported stronger-than-expected second-quarter results on Wednesday, though its profit margins narrowed amid soaring input costs, dragging shares lower after hours trading.

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

Group revenue, Tesla said, rose 41% from a year ago to $16.94 billion, below analysts’ forecast of a total of $17.2 billion and the record of 18.76 billion dollars reached in the first quarter.

Automotive gross margins were 27.9%, down 500 basis points from a year ago, Tesla said, just inside Street’s forecast of 28.2%, due increased input costs and expenses related to the ramp-up of new plants in Austin and Berlin. Removing the impact of emissions credit sales, automotive margins were pegged at 26.2%, even as the average selling price of a Tesla vehicle increased by 5%.

“We continued to make meaningful progress across the business during the second quarter of 2022,” Tesla said. “While we faced some challenges, including limited production and shutdowns in Shanghai for most of the quarter, we achieved an industry-leading operating margin of 14.6%, free cash positive of $621 million and ended the quarter with the highest month of vehicle production in our history.”

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Tesla shares fell 0.75% in after-hours trading immediately after the earnings release to point to a Thursday opening price of $737.01 apiece.

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

Estimates of the costs of owning Tesla’s bitcoin vary, but the time of purchase suggests a level of around $32,600. This value, of course, jumped in the second half of 2021 when bitcoin hit an all-time high of around $67,000, but now looks much more fragile after falling below the $20,000 level the previous year. last month.

Bitcoin prices were last seen down 2% on the day at $23,020 apiece after the Tesla sale announcement.

Tesla, which suffered from supply chain disruptions, chip shortages and a 22-day shutdown of its Shanghai gigafactory in the three months to June, saw shipments drop 17 .7% from the previous period to reach 254,695 units lower than expected.

Raw material prices, as well as labor costs related to overall production cycles, have risen steadily over the past year, while nickel – a crucial component in the manufacture of batteries for electric vehicles – rose about 20% to $21,200 a tonne on the London Metals Exchange. . Battery-grade lithium carbonate prices are up about 60% from early 2021 levels.

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

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