Traders had been watching Tesla (NASDAQ:TSLA) carefully this week. The corporate reported its second-quarter outcomes following a 500% run-up in its share price over the previous 12 months. There was a excessive bar going into the earnings launch.
Whereas the electric-car maker’s outcomes initially impressed buyers, sending the stock larger in after-hours buying and selling on Wednesday, shares tumbled by the top of the week. The expansion stock was overdue for a breather.
As buyers digest the earnings report, which featured the corporate’s fourth consecutive quarter of profitability, here is a have a look at a number of the most vital takeaways from Tesla’s second-quarter earnings name.
Model 3. Picture supply: Tesla.
1. Tesla’s cash place is bettering
Tesla CFO Zachary Kirkhorn identified that the corporate’s cash place was bettering, transferring Tesla additional away from the high-risk steadiness sheet it used to sport.
“On cash flows, our cash steadiness elevated to our highest degree but of $8.6 billion, which included free cash flows of over $400 million,” defined Kirkhorn. The CFO went on to notice that this occurred whilst the corporate elevated capital bills to put money into its new factories in Shanghai and Berlin.
2. Autonomous driving is Tesla’s greatest alternative
A big portion of Tesla’s earnings name was spent discussing the corporate’s efforts to attain full self-driving (FSD) functionality. “FSD stays, by far and away, the largest alternative within the close to time period,” Kirkhorn mentioned. “Relying upon the way you calculate, [the opportunity] might be worth a minimum of $100,000 per automobile,” Musk added later within the name.
Tesla’s car software program that at the moment permits the corporate’s driver-assist functionality has improved over time. Most just lately, Tesla launched an replace for its automobiles to see site visitors lights and cease indicators and to reply accordingly. Finally, Tesla believes it could actually allow a self-driving functionality that shall be safer than human driving — and it plans to do that with an over-the-air software program replace. After all, Tesla says that even when it could actually pull this off, the rollout shall be restricted by regulatory approval and might range from one jurisdiction to a different.
3. Tesla’s aggressive benefit
There was a time when manufacturing gave the impression to be Tesla’s weak point. Manufacturing points plagued the preliminary manufacturing ramp ups of Model S, Model X, and Model 3. However the launch of Tesla’s Model Three at its new manufacturing facility in China and the corporate’s new Model Y at its California manufacturing facility haven’t solely gone easily, however are additionally occurring at quicker paces than earlier launches.
“It is a greater manufacturing facility for much less cash in much less time,” Musk mentioned about its improved effectivity at constructing automobile factories and new manufacturing strains.
The CEO went so far as to say that he believes manufacturing will grow to be the corporate’s aggressive benefit. “So the long-term sustainable benefit of Tesla, I believe, shall be manufacturing.”
4. Massive hopes for Tesla Power
It is simple to miss Tesla’s power technology and storage enterprise (referred to as Tesla Power), which accounted for simply 6% of complete income in Q2. However Musk has massive hopes for the enterprise. “I believe long run, Tesla Power shall be roughly the identical dimension as Tesla Automotive,” he mentioned.
5. Demand is powerful
Lastly, Tesla as soon as once more refuted issues about whether or not demand is turning into a limiting issue for the corporate’s car gross sales. However Musk emphasised that it wasn’t demand that would restrict deliveries to the corporate’s goal of 500,000 models this yr (up from 368,000 in 2019), however manufacturing. “Demand isn’t an issue, positively not,” he mentioned.
For the reason that launch of Tesla’s Model S in 2012, critics have usually mentioned that Tesla overestimates the demand for its merchandise. But annual deliveries over the previous 5 years have elevated roughly tenfold.