Tesla (NASDAQ: TSLA) announced its 2023 Q2 financial results on July 19, 2023. According to the announcement, total revenues were up 47% (YoY, 3 months). Total gross profit was up 7% and income from operations was down 3% (YoY, 3 months). On the other hand, net income attributable to common shareholders (GAAP) was up 20% (YoY, 3 months). It seems to be thanks to continued efforts of the company’s cost reductions.
In addition, adjusted EBITDA was up 23% year-over-year basis and up 9% quarter-over-quarter basis (3 months). At least partially due to decreased ASP (Average Selling Price), Tesla’s profit margins became lower in 2023 Q2. GAAP gross margin was 18.2%, down 682 bp, year-over-year (3 months). In addition, operating margin was 9.6%, down 493 bp, year-over-year.
Net cash provided by operating activities was up 30% year-over-year basis and up 22% quarter-over-quarter basis (3 months). In this regard, Tesla’s stock price tends to be highly correlated with trends in the operating cash flow. Free cash flow was recorded as a cash outflow of USD 469 million in 2023 Q2 despite it was recorded as a cash inflow of USD 1,457 million in 2022 Q2 (3 months). Recording outflow of free cash flow in 2023 Q2 was partially due to increase in purchases of investment securities.
As we have explained above, Tesla is continuing its efforts for cost reduction despite the lower ASP. It resulted in the strong trends of net income and operating cash flow. Watanabe & Brothers’ Investment expects Tesla’s to continuous and sustainable growth in the future.
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