Heading into today's TSLA earnings, Wall Street was braced for a miss, with debate only around how big it would be. Well, it wouldn't be an Elon Musk joint if there wasn't some big twist, and sure enough, the stocks is soaring after hour on what can only be described as a very big, and very unexpected beat.
Here is what the company reported for the first quarter:
Perhaps the most interesting of the above, besides the modest beats in revenue (which benefited from positive FX impact of about $900 million in the quarter translating into $200 million at the bottom line; as well as higher average selling prices) and EPS, is that despite weak EV and energy unit sales, Tesla’s reported gross margins in both businesses are up. Generally, fixed costs spread over fewer units puts pressure on GPM, all else equal. The auto margin, less credits, of 19.2% is up q-o-q and y-o-y. In energy,despite lower revenue both sequentially and versus last year, Tesla reports what looks like a record gross margin for that business of almost 40%.
Yet while Tesla turned in higher auto gross margins than expected, given weak sales, that fades away when reading down the P&L: operating margin of just 4.2%.
Meanwhile, earnings continue to subsist heavily on a diet of regulatory credit sales, which in Q1 dropped to 381 million from $337 million a year ago, and net interest income.
Here is the qualitative YoY comparison:
Starting at the top, it's no surprise that that TSLA likes soaring gas prices, which have helped a "rebound in demand" in the core US market, to wit:“We saw continued growth in demand for our vehicles in markets in APAC and South America, while also seeing a rebound of demand in both EMEA and North America.”
The surprisingly optimistic comments come several weeks after the automaker reported one of its worst quarters of auto sales in years.
Here is how TSLA laid out its automotive business"We are focused on optimizing our vehicle product portfolio, with an emphasis on vehicles designed for a fully autonomous future. We continued the launch of Model 3 and Model Y trims globally, including the roll-out of the Model YL in markets outside of China and more affordable trims of both models. We also began deliveries of Cybertruck in the UAE."
Unlike recent quarters, we didn’t have an “other updates” section with a surprise investment, there’s minimal change in language and if anything it projects a lot of confidence in core business. In short, a "no surprises, no drama" print.
Source: ZeroHedge News
