Tesla Reports Mixed Q2 Results, Misses Wall Street Expectations

Tesla’s (TSLA) stock took a hit on Thursday after the electric vehicle pioneer reported mixed second-quarter results that fell short of Wall Street expectations. Despite a revenue beat, the company’s adjusted earnings per share (EPS) came in lower than anticipated, sending its stock price plummeting in premarket trading.

According to Tesla’s Q2 earnings report, the company’s revenue came in at $28.24 billion, surpassing the $26.32 billion expected by Bloomberg consensus. However, its adjusted EPS of $0.33 fell short of the estimated $0.50. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) came in at $3.2 billion, versus $4 billion expected.

Tesla’s cash burn rate was less than expected, coming in at -$1.09 billion versus -$3.64 billion estimated. The company’s CEO, Elon Musk, acknowledged that safety considerations will limit the growth of its Robotaxi service, which has expanded to seven major metro areas. Musk also confirmed that full self-driving active subscriptions have climbed to 1.48 million, up 56% from a year ago.

Tesla’s aggressive spending on capital expenditures across several fronts, including Optimus humanoid robot production, AI data center build-out, and Cybercab production ramp-up, has led to speculation that the company may be overextending itself. However, the revenue jump comes after Tesla reported a blowout delivery quarter, with Q2 deliveries of 480,126, up 25% year over year and easily topping Bloomberg consensus estimates of 397,466.

Several catalysts powered the spike in sales, including the new Model Y now being fully ramped, Tesla competing hard on price around the world, and the fading ‘Musk effect’ or the impact of Tesla’s CEO’s controversial takes and political positions on sales.

Deepwater Investment’s Gene Munster added that the end of ‘the EV winter that started in March of 2024’ is a factor, while noting that high gas prices and the fading DOGE headwinds also lifted sales. Tesla’s sales across its important territories are trending in different directions, with the US sales hit hard by the expiration of the federal EV tax credit and Europe registering a nearly 108% increase in May.

Deutsche Bank’s Edison Yu noted that international strength is doing the heavy lifting, with Europe acting as the standout driver and China providing further support. Tesla’s CFO, Vaibhav Taneja, confirmed that the company’s capex would be ‘more than $25 billion’ this year, exceeding analysts’ expectations of $25.16 billion.

Tesla’s Aggressive Spending on Capex

Tesla is spending aggressively on capital expenditures across several fronts, including Optimus humanoid robot production, AI data center build-out, and Cybercab production ramp-up. These bets justify Tesla’s rich valuation but are also consuming cash right as the auto business is improving.

Analysts are weighing the pros and cons of Tesla’s aggressive spending on capex, with some questioning whether the company is overextending itself. However, Tesla’s CEO, Elon Musk, remains optimistic about the company’s prospects, citing the growth of its Robotaxi service and the increasing demand for its electric vehicles.

Q2 Results in Detail

Tesla’s Q2 results were a mixed bag, with the company reporting revenue of $28.24 billion, surpassing the $26.32 billion expected by Bloomberg consensus. However, its adjusted EPS of $0.33 fell short of the estimated $0.50. Adjusted EBITDA came in at $3.2 billion, versus $4 billion expected.

Tesla’s cash burn rate was less than expected, coming in at -$1.09 billion versus -$3.64 billion estimated. The company’s CEO, Elon Musk, acknowledged that safety considerations will limit the growth of its Robotaxi service, which has expanded to seven major metro areas.