Tesla (NASDAQ: TSLA) shares are up over 13% this week after the company delivered Q2 results earlier this week.
How Did Tesla Perform in Q2?
The electric vehicle (EV) company reported a quarterly profit of $2.26 billion, a 32.9% decrease compared to last quarter, and a 28.4% decrease from a year ago, mainly due to inflation and an increase in competition for EV components.
The profit was made on a $16.93 billion revenue, which topped a consensus estimate of $17.1 billion for Q2, but was still down compared to $18.7 billion from the previous quarter. The automotive revenue came in at $14.6 billion, with $1.47 billion coming from services and other revenue and $866 million from the energy division.
Profit-wise, Tesla still managed to top the second quarter of 2021 where it earned $1.1 billion on $11.9 billion in revenue. The main reason behind this 42% increase in revenue is the raised prices for all of its EVs compared to the last year plus more deliveries.
When it comes to automotive regulatory credits revenue, the report shows a 3% decline compared to Q2 of 2021. Tesla reported adjusted earnings per share (EPS) of $2.27, above the consensus estimates of $1.81 per share, as reported by Refinitiv.
The EV automaker also converted 75% of its Bitcoin purchases into fiat currency, bringing in an additional $936M of cash to its balance sheet. This decision came in with an explanation from Elon Musk himself since the company purchased $1.5 billion worth of bitcoin just over a year ago.
“The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the covid lockdowns in China would alleviate so it was important for us to maximize our cash position… This should be not taken as some verdict on Bitcoin.” Musk commented on the earnings call.
‘Gigantic Money Furnaces’
The high cost of new production sites and additional infrastructures certainly affected the Q2 results. Back in May, Musk referred to new factories in Austin, Texas, and Grünheide in Brandenburg, Germany as “gigantic money furnaces.”
However, Tesla will look to reap benefits from the new investments, as the Berlin factory produces more than 1,000 cars per week in June. Musk also predicts that Austin, Texas’s new factory will soon reach the same production milestone.
Additionally, the EV company reported opening 709 shop and service sites and 3,971 Supercharger locations in the second quarter, increasing its shop and service capacity by 19% and its charging locations by 34%.
Talking about the future, Elon Musk stated that Tesla hopes to begin shipping the highly anticipated Cybertruck in the middle of next year.
Ongoing Twitter Saga an Overhang for Tesla Stock
Tesla shares were mostly trading lower in the last few weeks as investors are concerned about repercussions for the EV company given Elon Musk’s legal fighting with Twitter.
Even though he might lose billions in a legal battle with Twitter, Musk earned billions of dollars from selling Tesla shares which may leave the world’s richest man in a better financial position than when he first announced the acquisition of the social media platform.
Legal experts think that Musk’s attempt to back out of his $44 billion acquisition of Twitter might cost him billions of dollars. However, Tesla’s CEO currently seems to be sitting on about $8.5 billion in cash that was raised by selling shares of the car manufacturer in late April to fund the Twitter acquisition.
“He is almost certainly in a better cash position now than he was a year ago because he has sold so much Tesla stock, particularly at a fairly high price,” Guidehouse Insights analyst Sam Abuelsamid said.
“However, depending on what the ultimate outcome of the litigation around this is, he could end up being in a much worse situation,” Abuelsamid added.
Abuelsamid believes that Musk selling more stocks to fund his legal battle with Twitter might hurt the price of Tesla stock, even though Musk twitted that he has no intentions of doing so. Musk may have to pay income tax for the shares he sold, but it is unclear how much at this point.
Although the protracted Twitter saga is creating an overhang on the Tesla stock, investors have sent shares of the EV maker higher this week on better-than-feared results.