7/19/2023: Tesla Q2 Beat Expectations

Revenue +47% YoY

Tesla reported Q2 2023 earnings after market close today. Revenue was $24.93B vs $24.47B expected. EPS was  $0.91 vs $0.82 expected. Net income was $2.7 billion, up 20% YoY. Gross margin was 18.2%, down from 25% a year ago. Operating margin was 9.6%, down from 14.6% a year ago. Tesla managed to grow revenue 47% YoY in Q2 vs. 44% in Q1. That was impressive given how high the interest rates are.

Overall, this is a great quarter for Tesla. They managed to sell most of the vehicles they produced. They did have to give a lot of discounts and incentives to make it happen but this also means they have very competitive products in the market and they generated  $2.7B of net income despite all the discounts. Kudos to them. But again, Tesla is a great company but I think TSLA 0.00 stock is too expensive. They make $10B a year in profits but their market cap is $900B!!! The growth of their non-vehicle business is accelerating, which is great as car charging and energy storage are higher margin businesses. But I don’t know if this justifies its super high valuation. I am always amazed by the brave investors who bought TSLA 0.00 stock at these valuations. I do actually indirectly own Tesla through index funds but I will never directly buy Tesla or Nvidia at >100X FCF multiples.