Topline
Tesla stock faltered after its Tuesday afternoon earnings report, despite better-than-forecasted sales, as the company’s extended profit growth slump continues to eat into its valuation.
Key Facts
Tesla raked in $0.52 of earnings per share (EPS) in the second quarter, falling well short of consensus analyst projections of $0.61.
That’s 43% below Q2 2023’s $0.91 EPS, marking the fourth consecutive quarter of negative profit growth for the car maker.
Yet Tesla’s $25.5 billion of sales topped estimates of $24.5 billion, up 2% year-over-year.
Shares of the ever-volatile Tesla fell about 3% after the mixed earnings release.
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Key Background
Earlier this month, Tesla announced it delivered 444,000 vehicles during Q2, which, though 5% below Q2 2023’s 466,000, was above analyst projections and was a far milder decrease than the first quarter’s 9% year-over-year decline. That sent Tesla stock soaring, with shares up 7% in the three weeks between its deliveries announcement and earnings report, turning a 16% year-to-date decline to a flat return. At Tuesday’s close of just below $250, shares of the carmaker are still in an extended rut, down almost 40% from their late 2021 peak of over $400, moving against the S&P 500’s 22% positive return over the period. Tesla CEO Elon Musk, who owns 13% of the company, is by far the richest man in the world, worth about $250 billion according to Forbes’ estimates.
Big Number
Over 40%. That’s how much lower Tesla’s adjusted earnings per share (EPS) was during the first two quarters of 2024 than it was during 2023’s first half, as the firm delivered fewer vehicles and cut prices globally as competition in the electric vehicle space swelled.
What To Watch For
If Tesla can return to growth after four consecutive quarters of year-over-year earnings declines. Consensus analyst forecasts expect Tesla to reverse course to positive EPS growth by 2024’s fourth quarter, but don’t call for Tesla to top 2022’s record profit until 2026.
Tangent
Tesla, whose reputation is arguably more closely linked to its chief executive than any other large public company, is now caught up in the presidential election. Musk, who also owns the social media site X, endorsed Republican candidate Donald Trump earlier this month, and reportedly intends to donate $45 million monthly to groups supporting Trump. Conventional wisdom would peg that as a surprise, considering Trump’s history of bashing electric vehicles (and even Musk and Tesla), but analysts think a Trump presidency could be a boon for Tesla even if Trump kills EV tax credits which stimulate demand, as tariffs on Chinese imports would prevent cheaper EV firms BYD and NIO from penetrating the U.S. market.