Tesla stock price slumps after Q2 earnings
Tesla reports a 45% drop in Q2 profits, with net income falling to $1.47 billion. Despite challenges, revenues rose 2% to $25.5 billion, driven by energy storage performance and regulatory credits.
Profit slump and financial performance
Tesla (TSLA-US) reported a significant 45% drop in second-quarter (Q2) profits for 2024, with net income falling to $1.47 billion, well below analysts' expectations of $1.9 billion. The electric vehicle (EV) giant faced headwinds, including slower sales, increased costs due to employee layoffs, and significant investments in artificial intelligence (AI) infrastructure.
Despite these challenges, revenues rose 2% to $25.5 billion, slightly exceeding expectations. This growth was primarily driven by record performance in the energy storage business and an unusually large sum of regulatory credits related to emissions requirements.
Operational costs and margins
Operating expenses soared 39% during the quarter, reaching almost $3 billion. This increase was partly due to restructuring and legal costs associated with the company's decision to cut 10% of its workforce in April. Tesla's closely watched gross margin fell to 18% in Q2, down from a peak of 29.1% in Q1 2022. Excluding the record $890 million in regulatory credit revenues, the automotive gross margin would have dropped to 14.6%.
Strategic focus on autonomy and robotics
Elon Musk, Tesla's Chief Executive Officer (CEO), has shifted the company's focus towards developing autonomous technologies and robotics. The unveiling of Tesla's "robotaxis" has been postponed from August to October, with Musk claiming that this project could potentially increase Tesla's valuation to $5 trillion. The company is also prioritising the development of Optimus, an autonomous humanoid robot. Musk stated that these robots are already performing tasks in Tesla factories, with limited production for consumer use expected to begin in 2026.
Market position and delivery numbers
Despite facing challenges, Tesla delivered nearly 444,000 EVs in the second quarter, representing a 4.7% year-over-year (YoY) decrease. This is an improvement from the first quarter's 387,000 deliveries and was sufficient to maintain Tesla's position as the largest EV company, ahead of China's BYD (285-HK).
Recent developments and stock performance
Tesla has had an eventful year, with shareholders reapproving Musk's $56 billion pay award and backing a proposal to reincorporate the company in Texas. Additionally, Musk has emerged as a prominent supporter of former president Donald Trump in the upcoming US election. Despite these developments, investor confidence has waned. Tesla's stock has fallen 8% in the past 12 months, and its market capitalisation has nearly halved from its peak of $1.2 trillion in November 2021.
Analyst ratings
Of the 30 analysts currently covering Tesla, the stock has received a mixed set of ratings:
- 12 'Buy' rankings
- 11 'Hold' rankings
- 7 'Sell' rankings
Tesla ranking chart
Tesla broker ratings chart
Tesla technical analysis
Tesla's stock price dropped sharply after last night's results, pushing the stock down 16% from the highs seen earlier in July. The price is now testing previous trendline resistance from the July 2023 highs, which it broke above approximately four weeks ago. Given Tesla's 60% rally from the April lows, some further consolidation or losses would not be surprising.
However, technical signals suggest a potential trend change. The 50-day simple moving average (SMA) is likely to cross over the 200-day SMA in the near future, indicating that dips in the stock could become buying opportunities.
Tesla daily chart
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