Market News

Tesla’s Q2 Earnings Exceed Expectations; Shares Rise

Story Highlights

Although mixed, Tesla’s financial report seems promising as the company ramps up production to meet strong demand for its electric cars. Also, the company is now less exposed to cryptocurrencies after adjusting its Bitcoin holdings.

Tesla (TSLA) delivered a mixed Q2 2022 scorecard that showed earnings exceeded expectations but revenues came a little short.

Following the earnings report, TSLA stock rose about 1.5% in extended trading on July 20, to settle at $753.30.

Earnings Numbers at a Glance

Revenue increased 42% year-over-year to $16.93 billion, but it slightly missed the consensus estimate of $17.1 billion. Adjusted EPS of $2.27 increased 56.6% year-over-year and beat the consensus estimate of $1.81. Tesla ended the quarter with $18.3 billion in cash, up from $17.5 billion in the previous quarter. 

Tesla’s Car Production and Deliveries

The Elon Musk-led company produced 258,580 cars, which increased 25% year-over-year. It delivered 254,695 cars, up 27% year-over-year. In a bid to boost output to take advantage of the strong demand for electric cars, Tesla is upgrading its manufacturing facilities in China and Germany.

Tesla Sells Bitcoin to Address Liquidity Concerns

In 2021, Tesla invested $1.5 billion in Bitcoin (BTC) – the flagship cryptocurrency. The company is unwinding that bet amid the crypto crash. The company sold 75% of its Bitcoin investment during Q2. CEO Musk explained that the decision to sell the crypto was informed by a need to shore up Tesla’s liquidity after the company had to close its China factory because of COVID-19 restrictions.

Executive Comment on Q2 Results 

“…In spite of all these challenges, it was one of the strongest quarters in our history…And as a result, we have the potential for a record-breaking second half of the year,” said Tesla CEO Musk.

Wall Street Is Cautiously Optimistic About Tesla 

On July 20, Morgan Stanley analyst Adam Jonas reiterated a Buy rating on Tesla stock with a price target of $1,150, which indicates 55% upside potential.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating, based on 16 Buys, five Holds, and six Sells. The average Tesla price forecast of $863.96 implies 16% upside potential to current levels. 

Bloggers Are Fairly Bullish on TSLA Stock

TipRanks data shows that financial blogger opinions are 68% Bullish on TSLA, compared to a sector average of 63%.

Key Takeaway for Tesla

For Tesla, the problem now is producing enough cars to meet demand, not finding customers to buy its products. Therefore, the company still has ample room to grow its sales and improve its profitability.

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