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Tesla reports a second-quarter earnings beat, 50% annual growth in vehicle deliveries

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Yahoo Finance reporter Pras Subramanian breaks down Tesla's second-quarter earnings results, which were a beat on both the top and bottom lines.

Video Transcript

SEANA SMITH: We have some breaking news out. Tesla has its earnings, just releasing its earnings. Pras Subramanian has that for us. Pras?

PRAS SUBRMANIAN: Hey, there, Seana. So yeah, the stock bounced around a bit here, up after hours. They reported a slight revenue beat of $16.9 billion versus the $16.88 expected. A big bottom line beat here. Q2 adjusted EPS of 2.27 a share versus 1.83 a share. So a beat on the top and bottom line here.

Free cash flow around $621 million, so less than last quarter but still positive here. They note that Berlin hit a milestone of 1,000 cars produced in one week. So that's a big thing for them in terms of the ramp-up of that Berlin gigafactory.

They're also maintaining their 50% CAGR growth rate-- or compound annual growth rate-- of 50%, which means they'll probably produce around 1.4 to 1.5 million vehicles in 2022. That's actually kind of reiterating that forecast, so a lot of very positive note there for investors.

They've also converted some of their crypto to fiat, around 75% of crypto converted to fiat. So they're noting that balance sheet change there.

Also just going to watch-- for the call, we're going to watch more on the ramp-up in Giga Berlin, Giga Austin. Want to hear more about the China factory, Shanghai factory, how that ramp-up is coming back. Are they back to normal? And also any supply chain issues, any production issues from that point of view?

So I'm going to keep looking at this release here. But back over to you, Seana.

SEANA SMITH: Thanks so much, Pras. Yep, that forecast here in terms of vehicle deliveries, I think, is the big reason why we're seeing shares pop. Like you said, up just about 4% after hours. They still expect to see 50% average annual growth in vehicle deliveries. We have Dan Ives of Wedbush coming on later in the show. That was a key thing that he was focusing on in this report was the guidance for the second half of the year when it comes to deliveries, when it comes to production.

We also want to talk about some of, I guess, what we could look to in the future here for Tesla. They expect to further increase Shanghai production rate, which obviously is good news here for the company. They did though, say that they saw continuation of manufacturing challenges on shutdowns during the latest quarter, something that we were expecting, given the Shanghai lockdowns that obviously impacted the company.

But Rachelle, looking at this report, it's pretty good here just in terms of what the Street was expecting, in line when it comes to revenue and a beat on adjusted earnings per share, 2.27. The Street was looking for $1.83.

RACHELLE AKUFFO: And we know that Elon Musk had previously referenced some of these high startup costs for some of these newer manufacturing hubs. So we knew that was going to take issue there. We knew that was going to come up. But I think this is much better than the Street was expecting.

I think this does put Tesla in a very strong position. A lot of people were wondering how much Tesla would be impacted by those shutdowns in Shanghai. Obviously, we'll hear more in the guidance that comes along with it. But I think this is a very strong earnings report for Tesla.

DAVE BRIGGS: Tesla grows 42% on the revenue, but margins decline. Let's bring in our panel, William Hueston back with a comment on those Tesla earnings. William, what do you see? What's your headline?

- Yeah, so I'm fortunate. I live less than a mile away from the Fremont Tesla factory. And for us, we can actually see how these trucks are being delivered. And I think Tesla is really good at surprising the market. I think a lot of the estimates, they're kind of softball pitches.

I'm shocked by the EP, that earnings per share. But I think, again, the narrative that we had where they were scaling back on some of their staff that was going to increase net income overall. The China slowdown, I think, is an issue like you said. And the supply chain is an issue there.

We knew they were going to deliver less cars than before. But I am curious to see just where that earnings per share actually came from. Was it just a shift in the balance sheet, or was it an effect of the release of a small percentage, like 3%, of their total staff came down? So that's what I'm going to say we're looking at overall. But I think Tesla, they're really dominating the EV space in terms of percentage of new vehicles that are purchased relative to their peer group.