4th Straight Quarter of Earnings Growth
Shares in Tesla are trading 4.75% higher pre-market on Thursday on the back of a solid Q2 earnings report yesterday.
The American electric vehicle and alternative energy company reported its fourth consecutive quarter of earnings growth yesterday an EPS of $2.18. This was well above 3 cents per share forecast. Tesla also reported revenues of $6.04 billion vs $5.37 billion expected.
Notably, the company also recorded its first full year of profitability on a GAAP basis. This means that it can now be eligible for listing on the S&P500
Regulatory Credits Revenues Explode
In terms of the breakdown of revenues, the runaway success came from Tesla’s revenues from regulatory credits which came in at $428 million, more than triple the $111.2 million reported in the same quarter last year. Revenues from automotive sales were down slightly. These fell by 4% year on year despite Tesla launching a new crossover SUV as part of its vehicle range.
Despite the bumper success seen over the quarter, Tesla cited the disruption caused by the COVID-19 crisis as the main headwind over the period along with the civil rights protests across America which impacted employees, consumers, and operations.
On the earnings call, founder and CEO Elon Musk cited expansion plans and highlighted plans to build a new factory in California for the production of Tesla’s Model S and Model X vehicles.
Looking ahead, Tesla has announced with enthusiasm a series of plans including a new, all-electric Tesla, a million-mile battery, a cyber-truck, as well as its target of having 1 million robotaxi’s on the road by the end of the year. Tesla CFO Zachary Kirkhorn said that he expects the company’s regulatory credits revenues to double over 2020 versus 2019.
In terms of achieving long term profitability, Tesla aims to reduce the cost of its vehicle production and to maximize profitability from software, such as its self-drive option.
Tesla shares are now trading higher by 280% on the year, with price rallying by 50% over July alone. Despite some pull back from earlier highs on the year, Tesla shares look well supported here with bullish expectations ahead.
Tesla Capped By Bull Channel Top
Tesla shares remain within the upper portion of the bullish channel which has framed the explosive rally seen this year. Price was recently caped at the channel top, printing all-time highs of 1793.97 but found support at the 1427.27 level. While this level remains intact, focus remains on a further grind higher and a break out to fresh highs on the year.
Below here, focus will turn to the rising channel low ahead of structural support at the 964.53 level.