Tesla Inc (NASDAQ:TSLA) beat estimates on earnings per share and improved revenue by 42% year-over-year despite a sharp drop in vehicle deliveries.
The electric vehicle company reported total 2Q revenue of US$14.6 billion compared to analyst expectations of $17.2 billion, which it attributed to an increase in average selling price.
However, its earnings per share of US$1.95 beat estimates of $1.81 and was up 91% year-over-year from 2Q 2021, sending shares rising around 1.2% after market close on Wednesday.
READ: Tesla shares deemed overpriced ahead of earnings on Wednesday
Austin, Texas-based Tesla produced 258,000 vehicles and delivered over 254,000 vehicles in 2Q, a drop of more than half from the 1Q’s total of 564,743 vehicles.
The company attributed this to supply chain issues, and factory shutdowns beyond their control. The company also noted that June was the highest production month in the company’s history.
Tesla noted 2Q free cash flow was $2.35 billion, compared to nearly $4 billion in 1Q but up over 11% year-over-year from 2Q 2021.
According to the letter to shareholders, Tesla worked hard on their bottom line: getting electric vehicles delivered to customers.
“We continued to make significant progress across the business during the second quarter of 2022. Though we faced certain challenge, including limited production and shutdowns in Shanghai for the majority of the quarter, we achieved an operating margin among the highest in the industry of 14.6%, positive free cash flow of $621 million and ended the quarter with the highest vehicle production month in our history,” Tesla wrote.
Analysts continue to favour Tesla
Analysts with Canaccord Genuity (TSX:CF, LSE:CF) reiterated their Buy rating on Thursday and raised their price target to US$815 from $801 based on 25 times their 2025 earnings per share of US$32.61, from the previous $32.04.
“We were most impressed with the company’s ability to generate positive free cash flow in the quarter despite COVID production shutdowns in China and ramping production in Austin and Berlin," Canaccord analysts wrote in a note.
“Barring a significant slowdown in order momentum due to recession, we see Tesla reaching escape velocity as the combination of improving China, Austin, Berlin and (even) Fremont capacity should lead to a doubling of weekly production volumes from 2Q22 levels to 40,000 per week by the end of 2022. With the trifecta of offerings in solar, energy storage and electric vehicles, Tesla remains the sustainability behemoth with sustainable free cash flow generation.”
Tesla's stock price was up around 9.9% at US$815 on Thursday afternoon.
--Update Thursday with share price, analyst comment--
Contact Susie at susie@proactiveinvestors.com