Tesla Inc (NASDAQ:TSLA) stock fell 9.04% (As on July 24, 11:29:09 AM UTC-4, Source: Google Finance) after the company missed on expectations on the earnings front. Its CEO Elon Musk warned that the company could face a “few rough quarters ahead” during its earnings call with analysts. Free cash flow plunged 89%, to $146 million, while operating cash flow fell 30% to $2.54 billion. Tesla ended the quarter with cash and investments of $36.8 billion, down $200 million quarter-over-quarter. The company’s services and other business, which includes Tesla’s Supercharging network, vehicle maintenance and repairs, parts and accessories, used vehicle sales, insurance, retail merchandise and artificial intelligence-assisted customer support services, rose 17% year-over-year, to $3.05 billion. Auto revenue for Tesla fell to $16.7 billion from $19.9 billion last year, within which, the revenue from sale of auto regulatory credits fell to $439 million from $890 million last year.
Further, Tesla began early builds of a more affordable EV model in June, with volume production set for the second half of 2025. The company also reiterated that its Cybercab and semi-trailer truck are on track for volume production in 2026. Tesla also continued to scale its AI infrastructure in the quarter and is now operating 67,000 H100-equivalent GPUs, as it positions software and fleet-based services as future profit drivers. Despite macroeconomic uncertainty, Tesla says it has sufficient liquidity to fund its product roadmap, expand capacity and remain resilient through shifting tariffs and fiscal conditions.
On the other hand, the company is engaged in preliminary discussions with Nevada officials regarding the expansion of its self-driving vehicle operations in the state, as the automaker looks to grow its recently launched robotaxi service.
TSLA in the second quarter of FY25 has reported the adjusted earnings per share of 40 cents, missing the analysts’ estimates for the adjusted earnings per share of 43 cents. The company had reported the adjusted revenue decline of 12 percent to $22.5 billion in the second quarter of FY25, beating the analysts’ estimates for revenue of $22.4 billion. The revenue decline was attributed to several factors, including lower vehicle deliveries, reduced regulatory credit revenue, and a decrease in average selling prices. The company’s GAAP operating income fell 42% year-over-year to $923 million, while GAAP net income declined 16% to $1.17 billion. Tesla’s gross margin contracted to 17.2%, a 71 basis point decrease from the prior year, while operating margin fell to 4.1%, down 219 basis points.