Tesla Inc (NASDAQ:) reported better-than-expected vehicle deliveries for the second quarter on Wednesday. That was above consensus estimates and the company’s own forecast. The electric carmaker delivered about 444,000 vehicles, down slightly by 4.8% year over year. But that was above the consensus figure of 437,800 and the company’s estimate of 419,000.
Despite production falling 14.4% year-over-year to 410,800 vehicles, Tesla has managed to significantly reduce its in-transit inventory levels since the first quarter, dropping by 33,000 vehicles. This represents 19 days of supply compared to 28 days in the first quarter and 16 days in the year-ago quarter.
Updated production and delivery numbers suggest Tesla's gross profit margin in the second quarter of the year excluding credits could be in the low to mid-16% range, remaining flat compared to the first quarter.
Tesla’s energy storage efficiency is particularly noteworthy. It deployed 9.4 gigawatt-hours in Q2, a massive 132% increase from Q1. This growth is driven by a mix of storage, Megapack/utility grade, and Powerwall/residential grade. Assuming that about 80% of these deployments come from Megapack, the Energy segment’s Q2 revenue could be close to $4 billion. This is above the consensus estimate of about $2 billion. The Energy segment, which has a gross margin of more than 20%, could improve Q2 EPS by $0.10 compared to Street expectations.
The company notes that while energy storage deployments can vary significantly from quarter to quarter, Tesla appears to be gaining momentum in this area. Looking ahead, the company notes that the potential in the energy sector, particularly with Megapack, is likely to be greater than most investors currently anticipate.
In other recent news, Tesla’s second quarter saw a year-over-year decline in vehicle deliveries, according to JPMorgan. However, Tesla’s sales were not as sharp as expected. The company may be able to manage production to be more in line with consumer demand. This is expected to help stabilize working capital and free cash flow. In another development, the European Union is considering imposing tariffs on Chinese electric vehicles, including those made by Tesla. The decision will be voted on by EU members in October.
Meanwhile, the ARK ETF reduced its holdings in Tesla, selling 62,867 shares. Tesla’s second-quarter deliveries, however, beat expectations, reaching 444,000 vehicles, slightly above the FactSet consensus and the company’s own estimates.
Analysts at Wedbush Securities raised their price target on Tesla stock from $275 to $300, while maintaining their outperform rating on the stock. On the other hand, Truist Securities maintained its rating on Tesla stock with a price target of $162.00.
InvestingPro Insights
Although Tesla’s latest vehicle deliveries have exceeded expectations. Therefore, investors are actively monitoring the company’s financial health and market performance. According to real-time data from InvestingPro, Tesla’s market cap is $737.53 billion. This reflects its significant position in the market. The company’s price-to-earnings ratio is currently at 53.27, indicating the premium valuation investors are willing to pay for its earnings. This is evidenced by the trailing-twelve-month P/E ratio of 54.02 as of Q1 2024, which is high compared to the industry average. This indicates strong investor confidence in Tesla’s future growth.
On the operational side, Tesla’s gross profit margin for the twelve months through Q1 2024 was 17.78%, which, while still large, is indicative of the competitive pressures and costs associated with the electric vehicle industry. In particular, the company achieved revenue growth of 10.12% during the same period. This demonstrates the ability to expand despite market challenges.
Two tips from InvestingPro that are particularly relevant to the context of this article are the company’s strong returns and its position in the industry. Tesla has delivered impressive returns over time. It has posted a remarkable total return of 17.77% over the past week and a return of 31.18% over the past month. This highlights the positive momentum the stock has had following the delivery report. Furthermore, as a prominent player in the auto industry, Tesla’s strategic moves, such as increasing its deployment of energy storage, are important to understand and impact the market and its potential for sustainable growth.
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