On Wednesday evening, Tesla Inc. reported second-quarter earnings above Wall Street projections, defying expectations that COVID-related shutdowns in China would hurt its results, thanks to vehicle price increases and the sale of the most of its bitcoins.
It was a tough quarter, but “we have the potential for a record second half” barring force majeure and other issues beyond the electric vehicle maker’s control, chief executive Elon Musk said on a call after results. “It’s been supply chain hell for several years.”
reported earning $2.3 billion, or $1.95 per share, in the second quarter, compared to $1.1 billion, or $1.02 per share, in the second quarter of 2021. Adjusted for one-time items, the company earned $2.27 per share.
Sales rose 42% to $16.9 billion from $12 billion a year ago, driven by higher sales, higher average selling prices and growth in other parts of the business, Tesla said in its letter to investors.
Analysts polled by FactSet had expected Tesla to report adjusted earnings of $1.81 per share on sales of $16.5 billion.
“From our perspective, this was perhaps Tesla’s most impressive quarter in years given the significant challenges it faced,” which included supply chain issues, disruptions from COVID- 19 in Shanghai and start-up costs in Austin and Berlin, CFRA analyst Garrett Nelson told MarketWatch. .
“The indication that the Fremont and Shanghai plants both hit their highest monthly production on record and are focused on a record second half of 2022 was other music to the bulls’ ears,” Nelson said.
Tesla said it faced “challenges” with shutdowns and limited production in Shanghai, but ended the quarter “with the highest month of vehicle production in our history.”
Headwinds also included higher raw material and logistics costs, including coin acceleration spending, the impact of the stronger dollar, and “bitcoin depreciation.”
Tesla ended the quarter with $18.9 billion in cash and cash equivalents. He said he converted around 75% of his bitcoin to BTCUSD,
purchases in what he called “fiat currency,” with realized gains offset by impairment charges of $106 million, chief financial officer Zach Kirkhorn said on the call. Tesla also incurred restructuring charges related to the targeting of layoffs and workforce reductions, Kirkhorn said.
Don’t miss: After Tesla sells off most of its bitcoins, Elon Musk says he’s ready to buy more, though ‘cryptocurrency is a side show’
Tesla’s free cash flow was “a little weak” compared to expectations, “but understandable given the supply chain disruptions,” RBC’s Joseph Spak said in a note after the results.
The second quarter “appears to be the near-term nadir with (Tesla) focused on ‘a record-breaking second half of 2022,'” Spak said.
The shares gained 1.5% in after-hours trading after the report. The stock ended the regular trading day up 0.8%.
Asked by an analyst about his role at Tesla and whether it will change in the next three or four years, Musk said he “will work at Tesla as long as I can meaningfully advance the cause of sustainability and self-driving.” .
Going into the results, Wall Street feared the second quarter would be tough due to ongoing supply chain issues, slower production ramps at Tesla factories in Austin, Texas, and Berlin, Germany, and pandemic-related shutdowns sidelining Tesla’s Shanghai factory. .
In a letter to shareholders accompanying the results, Tesla appeared to temper expectations for production ramps in Austin and Berlin.
The pace of production at both plants will be “influenced by the successful introduction of many new products and manufacturing technologies in new locations and by ongoing supply chain challenges. Factory ramps take time,” and these two will be no different, Tesla said.
The company said it was “making progress” on the Cybertruck, its electric pickup truck, which is to be manufactured in Austin after the Model Y production ramp. On the call, Musk reiterated that Tesla is on the right track. path to start Cybertruck production in mid-2023.
Tesla earlier this month reported lower quarter-over-quarter deliveries, its sales indicator, leading some analysts to lower their expectations for the electric vehicle maker’s quarter.
Tesla shares have lost 30% this year, compared to losses of around 17% for the S&P 500 SPX index,