Tesla released its Q2 2024 results with a decline in automotive revenue and earnings, attributed to factors such as high interest rates and increased competition in markets like China. However, the company’s energy business saw significant growth, with sales doubling compared to the previous year. The energy business includes energy storage products and solar energy systems, which saw strong demand for products like the Megapack and Powerwall. Tesla’s energy business also reported increased profitability, with gross margins of 24.5% during Q2 compared to the automotive business’s 18.5%.
The demand for energy storage solutions is expected to increase with the rising installations of renewable energy sources like wind and solar. Tesla’s storage solutions could help reduce intermittency by storing excess energy and discharging when demand exceeds production. The company is expanding its manufacturing capacity with a new plant in Shanghai, set to open early next year, potentially tripling its output of storage solutions. However, the energy business, accounting for 12% of Tesla’s total revenue, may not significantly impact the company in the long run due to its smaller size and competitive nature.
Tesla’s stock performance has been volatile over the past few years, with minimal change in stock price from early 2021 to now. The stock has underperformed the S&P 500 in 2022 but outperformed in other years. In comparison, the Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over the same period. The uncertain macroeconomic environment, characterized by high oil prices and elevated interest rates, raises questions about Tesla’s performance in the next 12 months – whether it will underperform or see a significant jump.
Trefis values Tesla stock at around $230 per share, aligning with the current market price. The analysis on Tesla’s valuation compared with peers provides insights into the company’s financial standing and potential growth. Tesla’s business model and revenue trends are detailed in Trefis’ dashboard on Tesla Revenue, offering a comprehensive overview of how the company generates income. The market-beating portfolios offered by Trefis highlight the performance of HQ Portfolio stocks, which have consistently delivered higher returns with less risk compared to the S&P 500.
Overall, Tesla’s mixed Q2 2024 results, with a decline in automotive revenue but growth in the energy business, reflect the challenges and opportunities facing the company. As Tesla navigates the competitive energy market and volatile stock performance, investors are closely watching how the company will position itself for future growth and sustainability in the evolving renewable energy landscape.
