On Wednesday, Tesla Inc (NASDAQ:TSLA) reported a better-than-expected number of vehicle deliveries for the second quarter, surpassing consensus estimates and the firm's own projections. The electric vehicle manufacturer delivered approximately 444,000 vehicles, a slight decline of 4.8% year-over-year but ahead of the consensus figure of 437.8k and the firm's estimate of 419k.
Despite a 14.4% year-over-year decrease in production to 410.8k vehicles, Tesla successfully reduced its in-transit inventory levels significantly from the first quarter, lowering them by 33,000 units. This reduction implies a supply of 19 days compared to 28 days in Q1 and 16 days in the same quarter of the previous year.
The updated production and delivery figures suggest that Tesla's Q2 Auto Gross Margin excluding credits could be in the low-to-mid-16% range, remaining roughly flat compared to the first quarter.
Tesla's energy storage performance was particularly noteworthy, with the deployment of 9.4 gigawatt-hours in Q2, a substantial increase of 132% from Q1. This growth is attributed to a mix of Megapack/utility-grade and Powerwall/residential-grade storage systems. Assuming that around 80% of these deployments are attributed to Megapack, the Energy segment's revenues for Q2 could approach $4 billion, far exceeding the consensus estimate of around $2 billion. The Energy segment, which boasts gross margins greater than 20%, could potentially increase Q2 earnings per share by $0.10 compared to street expectations.
The firm indicates that while energy storage deployments can vary considerably from quarter to quarter, Tesla seems to be gaining momentum in this area. Looking forward, the firm suggests that the potential in the energy segment, particularly with Megapack, is likely larger than most investors currently anticipate.
In other recent news, Tesla's second quarter saw a year-over-year decline in vehicle deliveries, as reported by JPMorgan. Despite this, Tesla's sales drop was not as steep as anticipated and the company managed to align its production more closely with consumer demand, which is expected to help stabilize its working capital and free cash flow. In other developments, the European Union is considering imposing tariffs on Chinese electric vehicles, including those produced by Tesla. This decision will be voted on by EU members in October.
Meanwhile, ARK ETFs have reduced their holdings in Tesla, selling 62,867 shares. However, Tesla's second-quarter deliveries exceeded expectations, reaching 444,000 units, a slight increase over the FactSet consensus and the company's own estimate.
Analysts from Wedbush Securities have raised their price target for Tesla from $275 to $300, maintaining an Outperform rating for the stock. On the other hand, Truist Securities maintained its Hold rating on Tesla shares with a price target of $162.00.
InvestingPro Insights
With Tesla's recent vehicle delivery report exceeding expectations, investors are keenly observing the company's financial health and market performance. According to real-time data from InvestingPro, Tesla's market capitalization stands at a robust $737.53 billion, reflecting its significant presence in the market. The company's P/E ratio is currently at 53.27, indicating a premium valuation that investors are willing to pay for its earnings. This is further evidenced by a P/E ratio of 54.02 over the last twelve months as of Q1 2024, which is high compared to industry averages, suggesting strong investor confidence in Tesla's future growth.
From an operational standpoint, Tesla's gross profit margin for the last twelve months as of Q1 2024 is 17.78%, which, while sizable, points towards the competitive pressures and costs associated with the electric vehicle industry. Notably, the company has managed a 10.12% revenue growth during the same period, demonstrating its ability to expand despite market challenges.
Two InvestingPro Tips that are particularly relevant to the article's context are the company's strong returns and its position in the industry. Tesla has experienced significant returns over various periods, with a notable 17.77% total price return over the last week and a 31.18% return over the last month, highlighting the stock's positive momentum following the delivery report. Additionally, as a prominent player in the Automobiles industry, Tesla's strategic moves, such as its increasing energy storage deployments, are crucial to understanding its market influence and potential for sustained growth.
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