Tesla (TSLA) experienced significant after-hours trading volatility following the release of its second-quarter financial results. Despite a billion-dollar revenue beat, the electric vehicle (EV) maker’s earnings fell short of Wall Street estimates, leading to a 4.7% drop in its stock price.
Tesla reported adjusted earnings of $0.52 per share, below the expected $0.62 per share, but exceeded revenue expectations with $25.5 billion, surpassing the anticipated $24.77 billion. This revenue beat was largely attributed to the company’s energy division, which contributed $3 billion, a record high for the segment.
However, automotive revenue, Tesla’s primary business, saw a 7% decline from the previous year, amounting to $19.9 billion. This drop in auto revenue, coupled with rising competition in the EV market and a slowdown in overall EV sales growth, has pressured Tesla’s profitability. The company also experienced a significant decrease in net income, which plunged 45% to $1.48 billion from $2.7 billion a year ago.
The mixed results led to an 8% drop in Tesla’s stock price in extended trading. Investors expressed concerns about the company’s ability to maintain its market dominance amidst increasing competition and a maturing EV market. Tesla’s adjusted earnings margin fell to 14.4% from 18.7% in the same quarter last year, highlighting the impact of recent price cuts and incentives on its profitability.
Despite the financial challenges, Tesla’s production figures showed improvement. The company delivered 443,956 vehicles globally in the second quarter, slightly exceeding the Bloomberg consensus estimate but still down nearly 5% from the previous year. Tesla also announced that its new model EV, the Cybertruck, is on track to achieve profitability by the end of the year.
Tesla’s regulatory credit revenue soared to $890 million, more than triple the figure from the previous year. However, this revenue stream could be at risk if political changes occur. Tesla CEO Elon Musk has publicly endorsed former President Donald Trump, who has vowed to abolish EV rebates and impose tariffs on vehicles produced in Mexico. This political uncertainty adds another layer of complexity to Tesla’s future revenue streams.
One of the standout performers in Tesla’s portfolio was its energy generation and storage business. The company achieved record quarterly revenues and gross profits in this segment, with energy storage deployments reaching an all-time high of 9.4 GWh. This success underscores Tesla’s strategic diversification beyond its automotive roots.
Tesla remains committed to innovation, with plans to unveil a robotaxi on October 10. Musk emphasized the company’s vision of fully autonomous vehicles, despite acknowledging past overly optimistic timelines. Tesla also revealed plans to introduce more affordable EV models by the first half of 2025, aiming to spur the next wave of EV sales growth.