Tesla Reported Second Quarter Financial Results

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Tesla Inc. (NASDAQ: TSLA)reported its second quarter financial results and topped revenue estimates. Despite missing earnings estimates, shares skyrocketed during Thursday’s pre-market hours by 9.6% after Tesla Chief Executive Officer, Elon Musk, promised a profitable second half.

For the second quarter, Tesla reported revenue of USD 4.0 Billion, increasing 43.4% year over year and topping Thomson Reuters’ estimates of USD 3.92 Billion. The Company reported an EPS loss of USD 3.06, slightly above Thomson Reuters’ forecast of an EPS loss of USD 2.92.

Tesla has long been under pressure by investors who were citing the Company’s profitability issues. Investors have voiced their concerns about the electric vehicle manufacturer and its ability to return value to shareholders.

Tesla made an initiative with its major restructuring plan, as the Company finished the quarter with USD 2.2 Billion in cash on hand. The Company expects it cash reserves to continue to grow, while spending USD 2.5 Billion less in 2018.

Another major issue with Tesla was its production numbers, especially with the Model 3. During the month of July, Tesla produced 5,000 Model 3 vehicles per week, on top of 2,000 Model S and X’s per week. The Company is now aiming for 6,000 Model 3 vehicles per week by late August and then eventually to reach the 10,000 per week benchmark by the end of the year.

The second quarter marked the highest orders for Tesla’s Model S and X vehicles. The Company produced 53,339 vehicles in the quarter, 22,319 Model S and X vehicles and 18,449 Model 3, totaling 40,768 deliveries. Automotive revenue grew by 47% year over year to USD 3.36 Billion in the second quarter.

By the third quarter, Tesla projects to produce 50,000 to 55,000 Model 3 in the quarter, representing a 75% to 92% increase quarter over quarter. The Company forecasts Model 3 gross margin to grow by 15% in Q3 and 20% in Q4 due to continued reduction in manufacturing costs.

Tesla also says despite the tariff on vehicle imports to China, imports in the U.S. have increased to 40%. The Company will adjust its pricing in China to offset increased costs, but will still see lowered volume in the region, however, Tesla does not expect global deliveries to be impacted significantly.

Musk also apologized to Bernstein analyst Toni Sacconaghi and RBC analyst Joseph Spak, after his unusual earnings call last quarter. Musk said his retorts back at the analysts were due to his lack of sleep and long work week hours and acknowledging that he was wrong for his behavior.

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