Tesla shares fell nearly 3% in after-hours trading on Wednesday after the company's second quarter profit and margins did not meet analyst expectations. Despite reporting record revenue and vehicle deliveries, the results raised concerns among investors.
During the second quarter, Tesla's total revenue reached $28.24 billion, demonstrating a 26% increase from the previous year, and surpassing the analyst consensus of $27.58 billion. Automotive revenue rose by 23% to $20.52 billion, while energy revenue increased by 13% to $3.14 billion.
However, adjusted earnings per share stood at $0.33, which was lower than the consensus estimate of $0.55. GAAP earnings also fell short, reporting $0.32 per share against expectations of $0.36. Compounding this concern, Tesla's operating income dropped 57% from the prior year to $398 million, resulting in an operating margin of just 1.4%. Analysts had anticipated an operating income of around $1.5 billion and a margin of 5.4%. The gross margin showed a decline to 16.8%, falling short of the 19.5% forecasted by analysts.
Amid these challenges, Tesla generated an impressive $4.7 billion in operating cash flow. However, it reported negative free cash flow of $1.09 billion due to capital expenditures surging to $5.79 billion. Furthermore, cash and short-term investments diminished by $1.2 billion, settling at $43.52 billion for the quarter.
On a brighter note, the company managed to deliver a record 480,126 vehicles during the period, marking a 25% increase year-over-year, while production saw a 10% uptick to 451,758 vehicles. Additionally, energy storage deployments grew by 41%, achieving 13.5 gigawatt hours.
Strategically, Tesla announced the beginning of Cybercab production at Gigafactory Texas, in addition to launching its robotaxi service across seven prominent U.S. metropolitan areas. The company has also initiated the setup of its first Optimus production lines at the Fremont factory after repurposing the space previously occupied by Model S and Model X lines.