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What to expect from Tesla's second-quarter earnings announcement on Wednesday?


Leon Mathias

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Electric carmaker Tesla Inc. (NASDAQ:TSLA) will report its second-quarter earnings after the bell on 24th July with the Street heavily focused on the company’s margin growth. While the world’s biggest electric automaker did a great job by scaling up production and reporting record deliveries in the three months to 30th June, the financial impact of the discounts and the costs associated with ramping up production could impact margins and the stock in the near-term.

Coming to the estimates, analysts predict Tesla to report a 60% jump in annual sales, to around $6.44bn with a GAAP loss of around $300m or $0.40 a share, a sharp improvement from last year’s loss of $3.06 a share. The strong performance comes on the back of Tesla’s three-fold rise in deliveries of its flagship Model 3 which helped lift the company’s total deliveries to a record 95,200 units in the second-quarter.

While revenue growth was led by customers advancing their purchases ahead of the withdrawal of the tax incentive offered to the carmaker, analysts expect revenues to be constrained going forward. However, Tesla is likely to show a positive free cash flow for the quarter after last quarter’s disappointing FCF of -$920m.

Since 2016, Tesla’s revenue growth has beaten Street estimates in all but two quarters and although the stock has underperformed most of its peers in the sector, the stock has rebounded close to 40% after hitting 29-month lows in May this year.

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