Yesterday Tesla Punished Skeptics Again by Reporting its Stellar Semiannual Financials

Tesla’s (TSLA) Q2 earnings came in at $1.45 per share on a comfortable $12 billion in sales. Consensus Estimate was looking for EPS (earnings per share) of $0.94 on $11.5 billion in sales. What is more, the reported operating profit came in at $1.3 billion – a new quarterly record, almost $500 million more than Wall Street expected, and acting as an obvious catalyst for the stock’s continuing recovery. As of Monday close, the company's capitalization stands at $633.51 billion. After the release of financial statements, the shares rose by more than +1.6% on the premarket reaching $668.30.

It has been a challenging year for Tesla stock since the company reported its Q1 2021 numbers on April 27. Tesla shares have dropped roughly 6% since then. The Nasdaq Composite, for comparison, has gained about 5% over the same span. Tesla stock has dropped about 7% YTD, trailing behind the comparable 17% and 15% respective gains of the S&P 500 and Dow Jones Industrial Average.

KEY POINTS OF THE REPORT:

• MONEY

- Operating cash flow less capital expenditures (free cash flow) in Q2 of $619 million.

- Net debt and finance lease payments in Q2 totaled $1.6 billion.

- Cash and cash equivalents in Q2 decreased by $912 million to $16.2 billion.

• PROFITABILITY:

- GAAP Operating income of 1.3 billion on Q2 operating margin of 11.0%;

- Q2 GAAP net income of $1.1 billion and non-GAAP net income of $ 1.6 billion;

- Q2 Gross Automotive Manufacturing Margin 28.4% GAAP (25.8% excluding loans).

• OPERATIONS

- Record volumes of car production and shipments in Q2;

- Successful launch of FSD subscription in July;

- Deliveries of the new Model S to customers were launched.

Also regulatory credit proceeds representing controversial sales of emission credits earned by producing more than Tesla's fair share of zero-emission cars, amounted to $354 million, down from $518 million reported in Q1 2021. Regardless of the treatment of these items in the second quarter, reported net income under GAAP at $1.1 billion, was far higher than the credit sales in the second quarter.

Tesla unveiled its Bitcoin (BTCUSD) holdings depreciation in Q2 to the tune of $23 million. By contrast, in Q1 Bitcoin trading generated a $101 million gain. The Bitcoin holdings were $1.33 billion at the end of the reporting quarter.

Bottom line: Having ashamed skeptics, Tesla broke new records in Q2 2021. More than 200,000 vehicles were manufactured and delivered, with a solid operating margin of 11% and GAAP net income of $1 billion for the first time.

In Q2, there were well-known supply chain bottlenecks, amplified by global semiconductor shortages and sea port congestions. Nevertheless, The Tesla Vision project was successfully launched, which was possible by the analysis of data from a million Tesla vehicles. The company promises to continue working to reduce the cost of Tesla's electric cars and to increase the speed of EV production.