[Moo Brief] TSLA slips 8% on 45% lower net income in Q2: Is it still a buy?
In the fiscal second quarter of 2024, $Tesla(TSLA.US$'s revenue climbed by 2% to $25.5 billion, with 78% from the main automobile business, 12% from energy storage business, and 10% from other businesses. The operating expenses soared 39% to $2.97 billion, earning before interest, tax, depreciation, and amortization slipped 21% to $3.67 billion, and net income dropped 45% to $1.48 billion. Earning per share is $0.52, lowered than expected $0.58.
![[Moo Brief] TSLA slips 8% on 45% lower net income in Q2: Is it still a buy?](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240724/1721786985141-8779652c98.png/big?area=103&is_public=true)
After the results announcement, $Tesla(TSLA.US$'s after-hour price fell 7.76% to $227.25 after-hour at 7:59 PM EDT on July 23.
What's behind the 45% declining net income? ![]()
✎ AI: main killer of net income but a key driver of future growth?
The rise in operating expenses and R&D costs related to AI has led to a decrease in $Tesla(TSLA.US$'s net income, despite the satisfactory Q2 car delivery numbers. As $Tesla(TSLA.US$ continues to develop its next-generation platform, launch Robotaxi, and upgrade its robot Optimus, the expenses related to AI are expected to keep growing. The market is also keenly interested in how TSLA's restructuring costs will lower in the future and whether ongoing improvements in production, operation, and other expenses will hedge the rising costs related to AI.
In terms of AI progress, $Tesla(TSLA.US$ has revealed that Optimus has been assigned to handle battery tasks at one of Tesla's factories. The southern expansion of $Tesla(TSLA.US$'s Texas super factory is nearing completion and will house the company's largest H100 chip cluster to date.
![[Moo Brief] TSLA slips 8% on 45% lower net income in Q2: Is it still a buy?](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240724/1721786969799-1e6abc8266.png/big?area=103&is_public=true)
✎ Automotive (78% of revenue): waiting for breakthroughs
In Q2, $Tesla(TSLA.US$'s automotive revenue dropped by 7%, even though TSLA's EV remains the market leader globally and Q2 models delivered better than expected. The decline in revenue is due to the decreasing average selling price of $Tesla(TSLA.US$ models under fierce EV competition. The gross margin of TSLA's automotive business, excluding carbon credits, was 14.6%, lower than expected. However, TSLA listed Cybertruck delivery numbers as a positive revenue factor, along with growth in its energy business.
▫️︎ The development of affordable models has diverted resources from current models. Similar to Q1, $Tesla(TSLA.US$ also announced that new models, such as affordable models, will be delivered in the first half of 2025.
▫️︎ Automotive regulatory credits: Carbon selling revenue doubled
One of $Tesla(TSLA.US$'s major profit drivers in the past has been the revenue gained from selling carbon emission credits. This type of revenue, known as "carbon selling," reached a record high of $890 million in Q2, more than double the $442 million in revenue in Q1.
![[Moo Brief] TSLA slips 8% on 45% lower net income in Q2: Is it still a buy?](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240724/1721787301469-db0eb957f5.png/big?area=103&is_public=true)
✎ Energy Generation and Storage (12% of revenue): driver of future growth under doubled revenue
In Q2, $Tesla(TSLA.US$'s energy generation and storage revenue grew by 100% to $30.14 billion. $Tesla(TSLA.US$ deployed 9.4GWh of storage products, including Megapack and Powerwall, which set a new record for a single quarter in the company's history. As a result, the revenue and gross margin of $Tesla(TSLA.US$'s energy generation and storage business also reached a new high in a single quarter.
![[Moo Brief] TSLA slips 8% on 45% lower net income in Q2: Is it still a buy?](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240724/1721787516233-632b18e439.png/big?area=103&is_public=true)
Regarding $Tesla(TSLA.US$'s energy business, the company also mentioned that the energy storage facility in Lathrop, California, achieved a record-high production volume in Q2. The Shanghai super factory is also on track to begin production in the first quarter of next year.
![[Moo Brief] TSLA slips 8% on 45% lower net income in Q2: Is it still a buy?](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240724/1721787950451-cd25917862.png/big?area=103&is_public=true)
✎ RoboTaxi: uncertainty of profitability timing
During the conference call, Musk confirmed that the initiation of RoboTaxi has been delayed from August to October 10. While this may seem like bad news, market sentiment was not as negative as expected. This may be due to the relatively long cycle required to complete the ecosystem and achieve large-scale application and profitability after the launch of RoboTaxi, as well as resolving safety issues, which will not have a significant impact on Tesla's short-term financial performance. The deployment of RoboTaxi still depends on technological progress and approval from regulatory agencies.
However, in the long run, the potential for RoboTaxi is limitless, and the arrival of profitability may help hedge $Tesla(TSLA.US$'s high AI costs. The innovation in the ride-hailing industry with RoboTaxi will also continue to attract market attention. We can compare Baidu's recently launched driverless taxi service, Apollo GO, in Wuhan, China, which has received positive market feedback and is expected to become profitable by 2025.
Outlook
$Tesla(TSLA.US$ stated that the company's car production in Q2 decreased compared to the previous quarter, but it is expected to increase in Q3. The production volume of Cybertruck in Q2 increased by more than twice compared to the previous quarter and is still on track to achieve profitability by the end of this year. The production of the electric semi-trailer, Semi, is on track to begin before the end of 2025.
Similar to the Q1 financial report, $Tesla(TSLA.US$ reiterated that due to its commitment to launching new-generation cars and other products, the growth rate of car production this year may be "significantly lower" than last year. $Tesla(TSLA.US$ also emphasized that the deployment rate of energy storage products and the revenue growth of the energy business is expected to exceed that of the automotive business this year.
![[Moo Brief] TSLA slips 8% on 45% lower net income in Q2: Is it still a buy?](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240724/1721787937578-6d444e6573.png/big?area=103&is_public=true)
Analysts' views：
According to a survey released by Morgan Stanley last weekend, investors are more concerned about $Tesla(TSLA.US$'s "AI narrative" than electric vehicles. 68% of investors view AI as the main driving force for $Tesla(TSLA.US$'s stock price in the next year, while only 33% are inclined towards electric vehicles.
As an investor, in which sector do you see $Tesla(TSLA.US$'s future development - traditional automotive business, energy storage business, autonomous driving, or AI sector? Do you think $Tesla(TSLA.US$ is still worth investing in? ![]()
Please drop your answer with reasonable comments, and you will receive 100 points. ![]()
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102362254 : Yes, Tesla is definitely still worth investing in. Tesla's future looks bright in many areas. They're making significant progress in self-driving cars and AI, which are cutting-edge technologies. Their energy storage solutions are also changing how we use sustainable energy. With their innovative path and strong market influence, Tesla remains a solid choice for long-term investment.
mr_cashcow : Rocky road ahead but $Tesla (TSLA.US)$ have shown to be a resilient company and I am sure their energy storage business, autonomous driving combined with robotic AI sector will form a strong ecosystem in the long run![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")