20 June 2023
If you are covering Tesla Q2 2023 results, please see the following comment from Mamta Valechha, equity research analyst at Quilter Cheviot:
"Tesla reported a mixed set of Q2 results last night, which is seemingly becoming the norm for Tesla given the number of moving parts it has as a business. It’s auto revenue was up +46% year on year and came in line with consensus. The focus however has been on margins as Tesla has been tactically cutting prices of its cars. As a result its gross margin fell slightly quarter on quarter to around 18% but again came in better than consensus expectations.
"Operating margins, however, were a miss (-80bps) and fell from the teens to around 10%, partially driven by increased spend on large products such as the Cybertruck and AI. But on the product side, Cybertruck deliveries have been confirmed for 2023, with productions already started.
"Speaking about AI, Tesla for the first time included AI and the Dojo supercomputer in their earnings deck, and no surprise dominated its results call as well. Tesla and other AI exposed stocks have outperformed on the back of NVIDIA’s strong quarter. And we understand the argument for Tesla’s run: The group will have 5 million vehicles on the road by 2025 which will have a software suite attached to them where Tesla can collect huge amount of real life driving data from. Tesla is a leader in machine learning from its various ventures such as the Dojo, Optimus and SpaceX.
"Moving back to near-term, Tesla today is still predominately auto stock and there is still caution around macro conditions and it is difficult to see when and to what level margins might bottom as Tesla strategically lowers prices, and puts further pressure on the competition.
"With that said there has been no change to outlook with Tesla still guiding for 50% annual unit growth, with volumes of 1.8 million. Tesla is a leader in a very uncertain automotive environment, which is going through a massive change so still represents a solid company."
