After the market close on Tuesday, Tesla announced still another quarter of weak earnings that sorely disappointed Wall Street. Its gross auto margins of 14.6% for Q2, excluding regulatory credits, registered well below consensus estimates of 16%. Not for the first time, the so-so performance of Elon Musk's company should make shareholders wonder whether Tesla stock deserves anything like its current massive valuations.
On the call, CEO Elon Musk stated that Tesla was facing "a bit of a hangover" caused by heavy competition from a flood of rivals' cars that though "not compelling," forced the EV giant to bolster sales by providing generous financing packages. The steep discounts helped lift Tesla's auto revenues a bit, but they're still lagging the company's numbers from Q2 to Q4 of last year by around 10%. Net profit showed a similar pattern of decline, hitting $1.48 billion, an improvement on the disastrous Q1 showings, but way less than the $2.5 billon-plus posted as recently as Q2 of 2023.
