Tesla Results: Revenue improves, margins impacted and nearly 75% of Bitcoin converted into fiat currency in Q2

Tesla saw a continuation of manufacturing challenges related to shutdowns, global supply chain disruptions, labor shortages, and logistics and other complications.

Tesla Results: Revenue improves, margins impacted and nearly 75% of Bitcoin converted into fiat currency in Q2

Elon musk’s Tesla continued to make significant progress across the business during the second quarter of 2022. Though the company faced certain challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, Tesla achieved an operating margin among the highest in the industry of 14.6%, a positive free cash flow of $621M and ended the quarter with the highest vehicle production month in company’s history.

Tesla (TSLA) share price is down by nearly 29 per cent YTD, while still clocking a 14 per cent gain over a 1-year period. Tesla stock price is around $760.

Company’s operating income improved YoY to $2.5B in Q2, resulting in a 14.6% operating margin. Operating margin in Q2 2021 was 11 per cent and in the previous quarter Q1 2022, it was 19.2 per cent.

YoY, operating income was primarily impacted by increased average selling price, growth in vehicle deliveries, profit growth in other parts of the business, lower stock-based compensation expense, higher raw material, commodity, logistics and expedite costs, higher per unit fixed costs in Shanghai due to shutdowns, negative FX impact and Bitcoin impairment.

New factories in Berlin-Brandenburg and Austin continued to ramp in Q2. Gigafactory Berlin-Brandenburg reached an important milestone of over 1,000 cars produced in a single week while achieving a positive gross margin during the quarter.

With each of the Fremont and Shanghai factories achieving their highest-ever production months and new factory growth, we are focused on a record-breaking second half of 2022. Fremont Factory made a record number of vehicles in Q2.

Total revenue of the company grew 42% YoY in Q2 to $16.9B. YoY, revenue was impacted by growth in vehicle deliveries, increased average selling price, and growth in other parts of the business.

Quarter-end cash, cash equivalents, and short-term marketable securities increased sequentially by $902M to $18.9B in Q2, driven mainly by the free cash flow of $621M, partially offset by debt repayments of $402M. As of the end of Q2, the company has converted approximately 75% of the Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.

In Q2, Tesla achieved record production rates across the company. However, the company saw a continuation of manufacturing challenges related to shutdowns, global supply chain disruptions, labor shortages, and logistics and other complications, which limited our ability to consistently run our factories at full capacity.

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