Tesla Q2 sales were strong thanks to record shipments, but Bitcoin collapse flashes warning sign

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Key points to remember:

  • Electric vehicle maker reported highest deliveries on record in second quarter
  • Investor concerns include chip shortage, competition, and the declining value of bitcoin
  • Strong demand for electric vehicles in China, but does that include Tesla?

    TSLA
    ?

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Tesla (TSLA) announced record second quarter electronic vehicle (EV) deliveries and continued to outperform competitors amid a global shortage of microchips. But it has been a bit difficult for the pioneer EV’s share price as competitors ramp up their engines.

Another concern is the fall in the value of bitcoin. TSLA shares have plunged more than 23% since it revealed on February 8 that it had bought $ 1.5 billion worth of bitcoin, the decentralized digital currency, now held on its balance sheet. A recent dip in crypto took bitcoin below $ 30,000 this week (from a high of around $ 65,000 in mid-April).

Investors and analysts will likely be tuned in for the latest information on competition, supply chain and labor issues, as well as his take on cryptocurrencies, during his second quarter earnings call. scheduled for July 26.

Are the competitors arriving quickly?

Some analysts have expressed concern about TSLA’s momentum in the coming quarters, citing competitors with a busier launch pipeline.

TSLA faces competition from companies like Ford (F), General Motors

DG
(GM), Volkswagen (VLKAF), Volvo (VOLVF), BMW (BMWYY) and Hyundai (HYMTF), who have all announced that they are looking to enter the arena of electric vehicles.

During the first quarter, F began deliveries of its Mustang Mach-E, its only current all-electric vehicle. GM has unveiled a new SUV version of the Chevrolet Bolt, its only US electric vehicle for sale at the moment. And Volkswagen has overtaken TSLA in electric vehicle sales in many European markets. The big Apple technology players

AAPL
(AAPL) and Amazon

AMZN
(AMZN) have also expressed their interest in joining the EV space.

Demand for electric vehicles appears strong in China, but perhaps not for Tesla. At the end of June, TSLA launched a recall of more than 285,000 cars in China over safety concerns with its Model 3 and Model Y speed governors, although trade media say it is a software adjustment. relatively easy to fix. There have also been high-profile complaints about the quality of consumer products in China. The developments could raise concerns about TSLA’s potential loss of market share to its China-based EV competitors such as Nio (NIO) and XPeng (XPEV).

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Based on data from the China Passenger Car Association cited by Barron’s, TSLA manufactured about 92,000 vehicles in China and sold about 63,500 in the country in the second quarter. That means China accounted for about 45% of Tesla’s total production and 30% of total sales in the three months ended in June, Barron’s reported. This would represent an increase from China accounting for around 21% of TSLA’s global sales in 2020.

Potential retarders

TSLA CEO Elon Musk warned of the lingering challenges in securing microcontrollers and raw materials. These shortages affect automakers as well as other industries.

Microcontrollers are computer chips used in automatically controlled products and devices, such as automotive engine control systems and touch screens. They are also used in implantable medical devices, remote controls, office machines, household appliances, power tools, toys and other on-board systems.

TSLA’s long-awaited new version of its Full Self Driving (FSD) beta software has apparently also been delayed. Musk said it would be shipped soon. “I swear!” he said in a recent tweet.

Supplies are hard to find; Abundant TSLA devotees

TSLA still has a healthy group of followers, both for its cars and its actions.

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TSLA Bulls report first quarter earnings of 93 cents per share, a significant increase from the 23 cents per share reported for the quarter of last year as the coronavirus pandemic hurt sales and forced its closings. factory in Fremont, California.

Yet, a few weeks ago, TSLA announced that in the second quarter of 2021, it had delivered 201,250 vehicles, more than double the amount in the same period a year earlier. Second quarter numbers broke the previous record set in the first quarter of this year, when TSLA shipped 184,800 and produced 180,338 cars, even as production of its Model S and X vehicles fell to zero during that year. trimester. The company began shipping its premium Model S electric sedans in the second quarter.

That being said, those second quarter deliveries were roughly in line with Wall Street expectations, but below some of analysts’ higher estimates. Stocks initially received some news support, but have since returned those gains.

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In recent years, TSLA’s growth has been driven primarily by demand in China and Europe. It is not known how TSLA’s sales went in the United States, as the company does not break down shipments by country.

TSLA’s battery technology, capacity and cost are considered global leaders in accelerating the global transition to electric vehicles. How quickly its competitors can catch up with or even overtake TSLA remains an open question.

Tesla earnings and options activity

TSLA is expected to report adjusted earnings of $ 0.96 per share, down from $ 0.44 in the previous year quarter, according to estimates from a third-party consensus analyst. Revenue is projected at $ 11.21 billion, up 85.8% from last year.

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The options market has taken into account a stock market movement of around 5% back and forth around the upcoming earnings release. Implied volatility is at the 4th percentile Wednesday morning.

Looking at the July 30 expiration, calls see some activity on 670 and 700 strikes, but the greatest concentration has been on the downside, in puts at 640 strikes.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a defined period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a defined period of time.

TD Ameritrade® Commentary for educational purposes only. SIPC member. Options involve risk and are not suitable for all investors. Please read Characteristics and risks of standardized options.

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