< BackTesla Q2 2024 Earnings Fall Short of Expectations, Stock Drops After Hours: How to Respond?
Key Takeaways
Tesla's Gross Margin Misses Expectations: Tesla's Q2 2024 EPS fell short of market expectations due to lower-than-expected electric vehicle (EV) gross margins.
Focus Shifting to FSD and Robotaxi: Although the earnings call provided no new surprises, Tesla is increasingly focusing on Full Self-Driving (FSD) and Robotaxi prospects.
Stock Reaction: Following disappointing earnings, the stock dropped significantly in after-hours trading, testing the support of the long-term descending trendline.
Long-Term Outlook: Despite the short-term decline, the long-term potential of the Robotaxi initiative presents a compelling investment opportunity.
Tesla: The Leader in U.S. Electric Vehicles, Dominating with Over 80% Revenue from Automotive Business Founded in July 2003 and headquartered in Palo Alto, California, Tesla (TSLA) is the largest EV manufacturer and seller in the U.S., holding nearly 50% market share in Q2 2024. Tesla's business is divided into two main segments: "Automotive and Related Services" and "Energy Generation and Storage," with the former accounting for over 80% of total revenue. The "Automotive and Related Services" segment is split into two parts in financial reports: Automotive and Services and Other, including:
Automotive Business: Contributing over 80% of total revenue, it includes well-known products and services such as vehicle sales, FSD, free supercharging, and OTA software updates. Additionally, it comprises revenue from regulatory credits and leasing services.
Services and Other: Covers after-sales repairs, supercharging fees, used car sales, retail merchandise, and auto insurance.
The "Energy Generation and Storage" segment focuses on solar energy and storage products, with its revenue share rising significantly, from 3.3% in Q1 2022 to 11.8% in Q2 2024, driven by the booming storage business. Tesla’s Production Capabilities and Future Prospects Tesla operates four major EV manufacturing plants in California, Texas, Shanghai, and Berlin. The Shanghai plant has the highest annual capacity of 950,000 units and serves as the main export hub. The Cybertruck, produced in Texas with an annual capacity of 125,000 units, is expected to become profitable by 2025 as production ramps up. Q2 2024 Performance: Dragged Down by Automotive Gross Margins, EPS Below Market Expectations Tesla’s Q2 2024 financial highlights:
Revenue: $25.5 billion, up 20% QoQ and 2.3% YoY, surpassing the market estimate of $24.7 billion.
Gross Margin: 18.0%, up 0.6 percentage points QoQ but down 0.2 percentage points YoY.
Non-GAAP EPS: $0.52, up 16% QoQ but down 43% YoY, missing the market estimate of $0.62.
The automotive segment generated $19.9 billion in revenue, up 14% QoQ but down 6.5% YoY, accounting for 78% of total revenue. Total EV production in Q2 decreased by 5.2% QoQ and 14% YoY to 410,831 units, while deliveries increased by 15% QoQ but decreased by 4.8% YoY to 443,956 units. The production-delivery gap widened to over 30,000 units, a company record, due to controlled production amid weaker-than-expected demand. Despite promotional discounts, gross margins continued to decline, with EV gross margins, excluding government subsidies, falling to 14.6%, below the market estimate of 16.2%. An additional one-time cost of $0.14 per share due to layoffs also negatively impacted EPS, leading to a more than 7% drop in Tesla's after-hours stock price. Shifting Focus from EV Profits to FSD and Robotaxi Prospects Although Tesla's revenue is primarily driven by EVs, the company’s strategic focus is shifting toward FSD and Robotaxi developments. Promotional efforts like zero-interest financing in China aim to maintain sales volumes and collect extensive data to optimize self-driving technology. Investors are increasingly focusing on the potential of FSD and Robotaxi, contributing to Tesla's high valuation. The latest FSD version 12.5 boasts parameters five times greater than version 12.4, integrating highway and city driving systems. These improvements are expected to significantly enhance customer experience and maintain Tesla’s competitive edge in autonomous driving. Energy Business and Optimus Robot: Future Growth Drivers Beyond self-driving developments, Tesla's energy business and the Optimus humanoid robot offer substantial growth potential. In July, Tesla announced a deal to supply Intersect Power with 15.3 GWh of Megapacks for its solar and storage projects, indicating significant future demand. According to TrendForce, global energy storage demand currently exceeds 100 GWh and is projected to surpass 1 TWh by 2030, driven by AI-fueled energy demand and net-zero carbon goals. Tesla plans to build a second Gigafactory in Shanghai with a 40 GWh capacity by Q1 2025, supporting long-term growth in the energy segment. The Optimus robot is expected to enter small-scale production in early 2025, with thousands of units primarily used within Tesla’s factories, and external deliveries anticipated in 2026. Investment Opportunity: Short-Term Weakness, Long-Term Potential Tesla's recent earnings call offered limited surprises, with previously anticipated delivery growth already factored in and disappointing EV gross margins. Despite the short-term stock drop, Tesla’s advancements in autonomous vehicles, energy storage, and robotics present significant long-term growth opportunities. Technically, Tesla’s stock broke out of a long-term downtrend in July. While short-term resistance at $265 may prompt a retest of the trendline support, the potential of self-driving taxis, energy storage, and humanoid robots provides a compelling case for long-term investment during market corrections.
< BackTesla Q2 2024 Earnings Fall Short of Expectations, Stock Drops After Hours: How to Respond?
Key Takeaways
Tesla's Gross Margin Misses Expectations: Tesla's Q2 2024 EPS fell short of market expectations due to lower-than-expected electric vehicle (EV) gross margins.
Focus Shifting to FSD and Robotaxi: Although the earnings call provided no new surprises, Tesla is increasingly focusing on Full Self-Driving (FSD) and Robotaxi prospects.
Stock Reaction: Following disappointing earnings, the stock dropped significantly in after-hours trading, testing the support of the long-term descending trendline.
Long-Term Outlook: Despite the short-term decline, the long-term potential of the Robotaxi initiative presents a compelling investment opportunity.
Tesla: The Leader in U.S. Electric Vehicles, Dominating with Over 80% Revenue from Automotive Business Founded in July 2003 and headquartered in Palo Alto, California, Tesla (TSLA) is the largest EV manufacturer and seller in the U.S., holding nearly 50% market share in Q2 2024. Tesla's business is divided into two main segments: "Automotive and Related Services" and "Energy Generation and Storage," with the former accounting for over 80% of total revenue. The "Automotive and Related Services" segment is split into two parts in financial reports: Automotive and Services and Other, including:
Automotive Business: Contributing over 80% of total revenue, it includes well-known products and services such as vehicle sales, FSD, free supercharging, and OTA software updates. Additionally, it comprises revenue from regulatory credits and leasing services.
Services and Other: Covers after-sales repairs, supercharging fees, used car sales, retail merchandise, and auto insurance.
The "Energy Generation and Storage" segment focuses on solar energy and storage products, with its revenue share rising significantly, from 3.3% in Q1 2022 to 11.8% in Q2 2024, driven by the booming storage business. Tesla’s Production Capabilities and Future Prospects Tesla operates four major EV manufacturing plants in California, Texas, Shanghai, and Berlin. The Shanghai plant has the highest annual capacity of 950,000 units and serves as the main export hub. The Cybertruck, produced in Texas with an annual capacity of 125,000 units, is expected to become profitable by 2025 as production ramps up. Q2 2024 Performance: Dragged Down by Automotive Gross Margins, EPS Below Market Expectations Tesla’s Q2 2024 financial highlights:
Revenue: $25.5 billion, up 20% QoQ and 2.3% YoY, surpassing the market estimate of $24.7 billion.
Gross Margin: 18.0%, up 0.6 percentage points QoQ but down 0.2 percentage points YoY.
Non-GAAP EPS: $0.52, up 16% QoQ but down 43% YoY, missing the market estimate of $0.62.
The automotive segment generated $19.9 billion in revenue, up 14% QoQ but down 6.5% YoY, accounting for 78% of total revenue. Total EV production in Q2 decreased by 5.2% QoQ and 14% YoY to 410,831 units, while deliveries increased by 15% QoQ but decreased by 4.8% YoY to 443,956 units. The production-delivery gap widened to over 30,000 units, a company record, due to controlled production amid weaker-than-expected demand. Despite promotional discounts, gross margins continued to decline, with EV gross margins, excluding government subsidies, falling to 14.6%, below the market estimate of 16.2%. An additional one-time cost of $0.14 per share due to layoffs also negatively impacted EPS, leading to a more than 7% drop in Tesla's after-hours stock price. Shifting Focus from EV Profits to FSD and Robotaxi Prospects Although Tesla's revenue is primarily driven by EVs, the company’s strategic focus is shifting toward FSD and Robotaxi developments. Promotional efforts like zero-interest financing in China aim to maintain sales volumes and collect extensive data to optimize self-driving technology. Investors are increasingly focusing on the potential of FSD and Robotaxi, contributing to Tesla's high valuation. The latest FSD version 12.5 boasts parameters five times greater than version 12.4, integrating highway and city driving systems. These improvements are expected to significantly enhance customer experience and maintain Tesla’s competitive edge in autonomous driving. Energy Business and Optimus Robot: Future Growth Drivers Beyond self-driving developments, Tesla's energy business and the Optimus humanoid robot offer substantial growth potential. In July, Tesla announced a deal to supply Intersect Power with 15.3 GWh of Megapacks for its solar and storage projects, indicating significant future demand. According to TrendForce, global energy storage demand currently exceeds 100 GWh and is projected to surpass 1 TWh by 2030, driven by AI-fueled energy demand and net-zero carbon goals. Tesla plans to build a second Gigafactory in Shanghai with a 40 GWh capacity by Q1 2025, supporting long-term growth in the energy segment. The Optimus robot is expected to enter small-scale production in early 2025, with thousands of units primarily used within Tesla’s factories, and external deliveries anticipated in 2026. Investment Opportunity: Short-Term Weakness, Long-Term Potential Tesla's recent earnings call offered limited surprises, with previously anticipated delivery growth already factored in and disappointing EV gross margins. Despite the short-term stock drop, Tesla’s advancements in autonomous vehicles, energy storage, and robotics present significant long-term growth opportunities. Technically, Tesla’s stock broke out of a long-term downtrend in July. While short-term resistance at $265 may prompt a retest of the trendline support, the potential of self-driving taxis, energy storage, and humanoid robots provides a compelling case for long-term investment during market corrections.
< BackTesla Q2 2024 Earnings Fall Short of Expectations, Stock Drops After Hours: How to Respond?
Key Takeaways
Tesla's Gross Margin Misses Expectations: Tesla's Q2 2024 EPS fell short of market expectations due to lower-than-expected electric vehicle (EV) gross margins.
Focus Shifting to FSD and Robotaxi: Although the earnings call provided no new surprises, Tesla is increasingly focusing on Full Self-Driving (FSD) and Robotaxi prospects.
Stock Reaction: Following disappointing earnings, the stock dropped significantly in after-hours trading, testing the support of the long-term descending trendline.
Long-Term Outlook: Despite the short-term decline, the long-term potential of the Robotaxi initiative presents a compelling investment opportunity.
Tesla: The Leader in U.S. Electric Vehicles, Dominating with Over 80% Revenue from Automotive Business Founded in July 2003 and headquartered in Palo Alto, California, Tesla (TSLA) is the largest EV manufacturer and seller in the U.S., holding nearly 50% market share in Q2 2024. Tesla's business is divided into two main segments: "Automotive and Related Services" and "Energy Generation and Storage," with the former accounting for over 80% of total revenue. The "Automotive and Related Services" segment is split into two parts in financial reports: Automotive and Services and Other, including:
Automotive Business: Contributing over 80% of total revenue, it includes well-known products and services such as vehicle sales, FSD, free supercharging, and OTA software updates. Additionally, it comprises revenue from regulatory credits and leasing services.
Services and Other: Covers after-sales repairs, supercharging fees, used car sales, retail merchandise, and auto insurance.
The "Energy Generation and Storage" segment focuses on solar energy and storage products, with its revenue share rising significantly, from 3.3% in Q1 2022 to 11.8% in Q2 2024, driven by the booming storage business. Tesla’s Production Capabilities and Future Prospects Tesla operates four major EV manufacturing plants in California, Texas, Shanghai, and Berlin. The Shanghai plant has the highest annual capacity of 950,000 units and serves as the main export hub. The Cybertruck, produced in Texas with an annual capacity of 125,000 units, is expected to become profitable by 2025 as production ramps up. Q2 2024 Performance: Dragged Down by Automotive Gross Margins, EPS Below Market Expectations Tesla’s Q2 2024 financial highlights:
Revenue: $25.5 billion, up 20% QoQ and 2.3% YoY, surpassing the market estimate of $24.7 billion.
Gross Margin: 18.0%, up 0.6 percentage points QoQ but down 0.2 percentage points YoY.
Non-GAAP EPS: $0.52, up 16% QoQ but down 43% YoY, missing the market estimate of $0.62.
The automotive segment generated $19.9 billion in revenue, up 14% QoQ but down 6.5% YoY, accounting for 78% of total revenue. Total EV production in Q2 decreased by 5.2% QoQ and 14% YoY to 410,831 units, while deliveries increased by 15% QoQ but decreased by 4.8% YoY to 443,956 units. The production-delivery gap widened to over 30,000 units, a company record, due to controlled production amid weaker-than-expected demand. Despite promotional discounts, gross margins continued to decline, with EV gross margins, excluding government subsidies, falling to 14.6%, below the market estimate of 16.2%. An additional one-time cost of $0.14 per share due to layoffs also negatively impacted EPS, leading to a more than 7% drop in Tesla's after-hours stock price. Shifting Focus from EV Profits to FSD and Robotaxi Prospects Although Tesla's revenue is primarily driven by EVs, the company’s strategic focus is shifting toward FSD and Robotaxi developments. Promotional efforts like zero-interest financing in China aim to maintain sales volumes and collect extensive data to optimize self-driving technology. Investors are increasingly focusing on the potential of FSD and Robotaxi, contributing to Tesla's high valuation. The latest FSD version 12.5 boasts parameters five times greater than version 12.4, integrating highway and city driving systems. These improvements are expected to significantly enhance customer experience and maintain Tesla’s competitive edge in autonomous driving. Energy Business and Optimus Robot: Future Growth Drivers Beyond self-driving developments, Tesla's energy business and the Optimus humanoid robot offer substantial growth potential. In July, Tesla announced a deal to supply Intersect Power with 15.3 GWh of Megapacks for its solar and storage projects, indicating significant future demand. According to TrendForce, global energy storage demand currently exceeds 100 GWh and is projected to surpass 1 TWh by 2030, driven by AI-fueled energy demand and net-zero carbon goals. Tesla plans to build a second Gigafactory in Shanghai with a 40 GWh capacity by Q1 2025, supporting long-term growth in the energy segment. The Optimus robot is expected to enter small-scale production in early 2025, with thousands of units primarily used within Tesla’s factories, and external deliveries anticipated in 2026. Investment Opportunity: Short-Term Weakness, Long-Term Potential Tesla's recent earnings call offered limited surprises, with previously anticipated delivery growth already factored in and disappointing EV gross margins. Despite the short-term stock drop, Tesla’s advancements in autonomous vehicles, energy storage, and robotics present significant long-term growth opportunities. Technically, Tesla’s stock broke out of a long-term downtrend in July. While short-term resistance at $265 may prompt a retest of the trendline support, the potential of self-driving taxis, energy storage, and humanoid robots provides a compelling case for long-term investment during market corrections.