Tesla sees higher revenue while capex spending dents cash flow

Tesla (TSLA) fell in after-hours trading on Wednesday after the Austin-based company released its second-quarter earnings report.

The electric vehicle giant reported revenue was up 26% year-over-year for that quarter that ended on June 30 to $28.2B. Tesla (TSLA) noted that it generated over $100B in revenue on a trailing twelve-month basis for the first time in its history. EPS came in at $0.33 vs. $0.51 consensus and $0.40 a year ago. GAAP net income for the quarter was $1.1B, and non-GAAP net income was $1.2B.

Operating margin was reported at 1.4% of sales, slumping from last year's mark of 4.1% and down sequentially. Total GAAP gross margin was 16.8% vs. 17.2% a year ago and 19.4% consensus. 

Adjusted EBITDA was $3.3B vs. $3.4B a year ago. For the quarter, the EV juggernaut's adjusted EBITDA margin fell to 11.6% of sales from 15.1% a year ago. Tesla (TSLA) saw its first negative free cash flow in more than a year with a mark of -$1.1B. Capital expenditures of $2.5B were a significant factor.

Tesla (TSLA) delivered 480,126 vehicles in the quarter and produced 451,758 vehicles. Model 3/Y deliveries for the quarter were 467,752, while other models accounted for 12,364 deliveries. 2% of vehicles were subject to operating lease accounting during the quarter.

On the balance sheet, Tesla (TSLA) ended the quarter with a cash position of $43.5B.

Outlook: "We continue to evolve and augment our product lineup with a focus on cost, scale, and future monetization opportunities via services powered by our AI software. We remain focused on growing our sales volumes through a differentiated and efficiently managed product portfolio, which includes leveraging and optimizing our existing production capacity before building new factories and production lines… Tesla Semi and Megapack 3 remain on schedule for production starting in 2026. First-generation production lines for Optimus are being installed in anticipation of production in 2026. Capacity build-out and ramp related to our multi-year infrastructure initiatives, including AI compute, solar, battery material, and semiconductor manufacturing, are underway."

Tesla (TSLA) will hold an earnings conference call at 5:30 p.m., which some analysts think will be the main event on earnings day.

Shares of Tesla (TSLA) were down 2.5% following the earnings release after shedding 1.3% during the regular session. Other auto stocks that have reacted in the past to Tesla's (TSLA) report include NIO (NIO), General Motors (GM), Ford Motor (F), Rivian Automotive (RIVN), and Lucid Group (LCID).

ETFs that are leveraged to Tesla's (TSLA) share price include the Direxion Daily TSLA Bull 2X Shares (TSLL) ETF, GraniteShares 2x Long Tesla Daily ETF (TSLR), ProShares Ultra TSLA ETF (TSLI), and Simplify Volt TSLA Revolution ETF (TESL). Other ETFs with a high weighting of Tesla (TSLA) include Global X Purecap MSCI Consumer Discretionary ETF (GXPD), Grayscale Bitcoin Adopters ETF (BCOR), the Fidelity MSCI Consumer Discretionary Index ETF (XLY), and the Fidelity MSCI Consumer Discretionary Index ETF (FDIS).