Tesla's Q2 EPS Soared by 91%

Tesla (TSLA) late Wednesday reported Q2 earnings beating consensus forecast and defying expectations that Covid-induced shutdowns in China would hurt its bottom line, thanks to vehicle price increases and selling of most of its Bitcoin stocks.

The quarter was challenging, but “we have the potential for a record-breaking second half of the year,” barring force majeure and other problems out of the EV maker’s control, CEO Elon Musk said in a call after the results. “It has been supply-chain hell for several years.”

In numbers, Tesla reported having earned $2.3 billion, or $1.95 a share, in the Q2, compared with $1.1 billion, or $1.02 a share, in the second quarter of 2021, posting a 91% growth annually. Adjusted for one-time items, the company earned $2.27 a share. Net income stood at $2.3 billion, a 98% boost year on year. Revenue rose 42% to $16.9 billion from $12 billion a year ago, thanks to increased sales, higher average selling prices and growth in other parts of the business. Remarkably, Model S/X deliveries increased by 753% on an annual basis. The company said it plans to further expand its manufacturing capacity “as rapidly as possible”, with an average annual growth of 50% in vehicle deliveries over the next several years.

Tesla ended the quarter with $18.9 billion in cash and equivalents. It said it converted about 75% of its Bitcoin (BTCUSD) purchases into real currency with realized gains offset by impairment charges of $106 million. Tesla also incurred restructuring charges related to targeting layoffs and workforce reductions.

"In Q2, we achieved record production rates across the company. However, we saw a continuation of manufacturing challenges related to shutdowns, global supply chain disruptions, labor shortages, and logistics and other complications, which limited our ability to consistently run our factories at full capacity," the company stated in its press release. Tesla said it faced “challenges” with shutdowns and limited production in Shanghai, but ended the quarter “with the highest vehicle production month in our history.

Tesla's shares rose 1.44% in after-hours trading to sell for $753.20. With P/E still around 70X further substantial price upside looks limited.