TSLQ
TSLA reported earnings following the markets close on July 20th, posting stronger-than-expected earnings for Q2. TSLA reported a $2.27 EPS. Automotive margins were 27.9%, down about 50% from last year. “We continued to make significant progress across the business during the second quarter of 2022,” Tesla said. “Though we faced certain challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, we achieved an operating margin among the highest in the industry of 14.6%, positive free cash flow of $621 million, and ended the quarter with the highest vehicle production month in our history.” The stock is trading flat after this report. More importantly, Tesla sold 75% of its bitcoin holdings, adding cash to its balance sheet estimated at $936 million. Bitcoin fell about 2% following the announcement. Elon stated that the sale was to ensure extra cash was on hand to combat the covid lockdowns happening in China. He informed investors that the company is looking to increase its bitcoin holdings and the sale should not be taken as TSLA having a negative stance on the cryptocurrency. Deliveries for the company fell 17.7%.
TSLA’s Texas and Germany factories were affected by supply chain issues, forcing Musk to that this was the reason for poor output. The German plant “reached an important milestone of over 1,000 cars produced in a single week while achieving positive gross margin during the quarter,” the company said. Elon described the quarter as a “supply chain hell”. Musk stated that the company has the potential for a record-breaking second half of the year but still cautioned the forecast could come up short, lol. TSLA is focused on growing global sales by 50% or more annually in the future and the company expects to be above that target by the end of the year.
The company is down 30% for the year and is now facing a potential after Musk’s flirtation with Twitter. While the company is revolutionary, the future doesn’t seem too optimistic in my opinion. As companies like Ford, GM, Chevy, and whoever else is manufacturing more affordable electric cars, TSLA doesn’t have much to offer other than that they were the first to market. Musk acts as though he is invincible and can do as he pleases but with current events possibly taking a stab at the EV giant, there isn’t much to care for. As they say, the bigger they are the harder they fall. The stock has been trading in the $700 range since early May. The overall market has maneuvered to the upside over the past week or so and TSLA hasn’t budged much. From a technical standpoint, the stock is stuck underneath its 760 resistance (chart below) and as of 5:35 PST, Jimothy Cramer is bullish on the stock. The stock is in a bear flag and a break below 700 should send the stock tumbling to 640 and then 559. In addition to this, the TSLQ ETF launched last week and looks to benefit from the downfall of the company. We’ll see how Musk and company performance throughout the rest of the year with both rising costs and increased borrowing rates. Thanks for reading and this isn’t financial advice.
