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Tesla Q2 earnings: TSLA Shares Rise on Rosy Figures, Bitcoin Falls on Sale Announcement


ArvinIG

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Tesla rises in after-hours trading on rosy earnings report; company sold 75% of Bitcoin position, pushing BTC lower and prices look poised to rise near wedge resistance.

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Source: Bloomberg
 
 

Tesla is higher in after-hours trading after posting a better-than-expected earnings report for its second quarter. The electric-vehicle company saw revenue at $16.9 billion, beating the $16.88 billion consensus forecast and rising more than 40% on a year-over-year basis. Earnings per share (EPS), on an adjusted basis, were $2.27, well above the $1.83 estimate. The company generated a slightly softer-than-expected free cash flow number at $621 versus the $625.2 million expected.

A 50% average annual growth rate for its vehicle deliveries remains a rather soft number for guidance especially considering the additional manufacturing capacity available for production. There were disruptions to manufacturing caused by Covid lockdowns in China. However, Tesla sees its Shanghai production rate increasing in the second half of the year.

The Fremont Factory in California produced a record number of vehicles, an encouraging milestone. Those vehicles were more expensive to construct, with automotive gross margin falling to 27.9% from 32.9%. That shows high inflation and competition for battery components are impacting profitability. Investors may brush that aside, given that it remains among the best in the industry.

Tesla converted $936 million worth of Bitcoin into fiat currency, boosting its balance sheet cash position. The conversion accounted for around 75% of Tesla’s Bitcoin. A specific impairment charge wasn’t given, but it is likely significant. The news weighed on BTC, with prices falling near the 23,000 level. In early 2021, Tesla announced the purchase of $1.5 billion in Bitcoin, a move that was seen as adding legitimacy to the cryptocurrency. Overall, the numbers are encouraging and may see Tesla’s share price perform well in the coming weeks.

Tesla technical outlook

Prices are at triangle resistance, which may lead to a run higher if bulls can overtake the level. Meanwhile, the 20-day Simple Moving Average (SMA) is on track to cross above the 50-day SMA, a bullish sign. The MACD and RSI oscillators are also showing positive movement, adding to the bullish outlook. Still, prices need to climb more than 50% to reach levels seen in April around 1,152.

Tesla daily chart

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Source: TradingView
 
Thomas Westwater | Analyst, DailyFX, New York City
21 July 2022

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