Tesla (TSLA +7.57%) stock gained 13.3% in after-hours trading on Tuesday, despite the electric-vehicle (EV) pioneer's release of disappointing first-quarter 2024 results. The stock's rise is attributable to investor relief stemming from two sentences in the company's "Outlook" section of its letter to shareholders:
We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025. These new vehicles, including more affordable models, will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.
Had Tesla not released the above plans, its stock almost surely would have declined. That's because the company's first-quarter's revenue and adjusted earnings per share (EPS) fell short of Wall Street's estimates. Below is an overview of the quarter, centered on six key metrics.
1. Revenue declined 9%
Quarterly revenue fell 9% year over year to $21.30 billion. This result missed the $22.15 billion Wall Street had expected.
Revenue decrease was driven by a lower vehicle average selling price (ASP) resulting from continued price cuts and vehicle model mix, along with a drop in vehicle deliveries. The company said the delivery decline was "partially due to the Model 3 update in the Fremont [California] factory and Giga Berlin [Germany] production disruptions." However, much of the decrease is attributable to continued weakness in the EV market.
In Q1, segment year-over-year revenue performance was as follows:
- Automotive segment revenue dropped 13% to $17.38 billion.
- Energy generation and storage revenue grew 7% to $1.64 billion. Growth was driven by a 4% rise in energy storage capacity deployments to a record of 4.05 gigawatt hours (GWh) resulting from strong demand for Megapacks, partially offset by a decrease in solar deployments.
- Services and other revenue jumped 25% to $2.29 billion. One growth driver was the company beginning in late February to open its North American Supercharger Network to more non-Tesla EV owners.
2. Vehicle production and deliveries fell 2% and 9%, respectively
In the first quarter, Tesla produced 433,371 vehicles (more than 412,000 Model 3 and Model Y units, and nearly 21,000 units of other models), down 2% from the year-ago period. The company delivered 386,810 vehicles (nearly 370,000 Model 3/Y and more than 17,000 other vehicles), down 9% year over year.
The sizable gap between production and delivery numbers largely reflects softening EV demand and has caused inventory to increase.
NASDAQ: TSLA
Key Data Points
3. Auto segment gross margin was 18.5%
In Q1, the automotive segment's gross margin (gross profit divided by revenue), based on generally accepted accounting principles (GAAP), was 18.5%. This number is down from 21.1% in the year-ago period, and also lower than last quarter's 18.9%.
4. Operating income dropped 56%
The quarter's operating income fell 56% year over year to $1.17 billion. Operating margin (operating income divided by revenue) was 5.5%, down from 11.4% in the year-ago period.
5. Adjusted EPS decreased 47%
In Q1, GAAP net income was $1.13 billion, or $0.34 per share, down 53% from the year-ago quarter.
Adjusted for one-time items, net income came in at $1.54 billion, or $0.45 per share, down 47% year over year. This result missed Wall Street's expectation of $0.51 per share, or a 40% decline.
6. Operating cash flow plunged 90%
In the quarter, Tesla generated $242 million in cash running its operations, down 90% year over year. Free cash flow was negative $2.5 billion, down from $441 million in the year-ago period. This decline was driven in part by $1 billion in spending on artificial intelligence (AI) infrastructure.
The company ended the quarter with $26.9 billion in cash, cash equivalents, and short-term investments, down $2.2 billion from the prior quarter.
A poor quarter, but good news on the launch of more affordable vehicles
In short, Tesla turned in a disappointing quarter. Its results likely didn't come as much of a surprise to many investors because it released its quarterly production and delivery numbers in early April.
The saving grace for the post-earnings release stock movement was the company announcing it planned to move up the timeline for the launch of more affordable vehicles. It had initially said it would start production of these vehicles in the second half of 2025. Many investors are optimistic that demand will be significant for lower-priced Tesla EVs.
