Who needs Twitter! Tesla profits rise by 25% more than analysts forecast after Elon Musk-owned firm raised prices of its cars: Bosses reveal they've also converted 75% of …

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Tesla saw higher-than-expected quarterly profits after the Elon Musk-owned company increased prices on its best-selling electric vehicles.

The company on Wednesday reported earnings of $2.27 per share on its $16.93 billion in revenue, a 25 percent increase from analysts’ estimated profits.

Tesla raised prices of its cars several times this year to cope with inflation and production challenges caused by COVID-19 lockdowns in China.

The firm also converted about 75 percent of its Bitcoin into nearly $1 billion in cash, prompting the world’s largest cryptocurrency to briefly slide by 0.5 percent.

The earnings report comes just weeks after Musk abandoned his $44 billion takeover of Twitter, citing issues with fake accounts on the platform. 

The social media giant hit the billionaire with a lawsuit and is trying to force him to make good on his April promise to buy the platform, alleging the ongoing dispute is harming its business. 

Tesla saw higher-than-expected quarterly profits after the Elon Musk-owned company increased prices on its best-selling electric vehicles. Musk is pictured on July 8

Tesla posted an adjusted profit of $2.27 per share on Wednesday versus analysts’ consensus estimates of $1.81.

The EV maker promised a ‘record-breaking second half’ to the year and reiterated its goal of 50 percent average annual growth in vehicle deliveries over a multi-year horizon, but did not give specific targets for 2022 deliveries in results materials.

Shares of Tesla were up about 1% in after-hours trade. The shares are down about 40% since their peak in November.

Its automotive gross margin fell to 27.9 percent, down from a year earlier and the preceding quarter, amid inflationary pressure.

The company has raised prices of its cars several times this year to cope with higher costs of lithium used in batteries and aluminum used for the body, along with other raw materials.

Musk has said, however, that Tesla would drop prices when inflation cools.

The company on Wednesday reported earnings of $2.27 per share on its $16.93 billion in revenue, a 25 percent increase from analysts’ estimated profits. Shares of Tesla were trading at $742.50 on Wednesday

Regarding its Shanghai factory, Tesla said: ‘Although limited production has recently restarted, we continue to monitor the situation closely.’ 

Tesla did not give a detailed production outlook for its factories in Berlin and Texas, which Chief Executive Musk had previously said were losing billions of dollars.

‘We are prepared for near-term margin headwinds due to (new) challenges with ramping new production, particularly in Berlin,’ Morgan Stanley said in a report after the earnings announcement.

‘Tesla’s solid quarter is the latest sign that it has done an outstanding job navigating through global supply chain and logistics challenges, weathering the storm better than most legacy automakers,’ said Jesse Cohen, senior analyst at Investing.com

‘Tesla’s improved manufacturing efficiency places it in a good position to produce more cars, putting it on track to break its deliveries target for the year.’

The above chart shows Tesla’s quarterly key metrics dating back to Q3 2019

Tesla is bracing for a potential recession and mounting competition from rivals. It also faces challenges of significantly boosting production in the second half, after China’s lockdowns hit production of the company and its suppliers.

Total revenue fell to $16.93 billion in the second quarter from $18.76 billion a quarter earlier, ending its streak of posting record revenue in recent quarters, as it struggled to meet demand for its electric cars due to a shutdown of its Shanghai factory and production challenges at new plants.

Analysts were expecting revenue of $17.10 billion, according to IBES data from Refinitiv.

Musk previously said Tesla’s new factories in Texas and Berlin were struggling to boost production, calling them ‘gigantic money furnaces’ which are losing billions of dollars.

The entrepreneur also said he had ‘a super bad feeling about the economy’ in June and began layoffs.

Tesla is bracing for a potential recession and mounting competition from rivals. Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany on March 22

Tesla also revealed it has converted approximately 75 percent of its bitcoin purchases into fiat currency, which added $936 million of cash to its balance sheet. 

The company had announced its investments in bitcoin early last year and Musk said last May that Tesla will not be selling any bitcoin.

‘It’s unclear exactly how much the group lost to the sell-off in crypto, but with 75 percent of its holding now converted into more stable currency, most of the damage has been recognized,’ said Laura Hoy, analyst at Hargreaves Lansdown.

Bitcoin stumbled late on Wednesday by as much as 0.5 percent to $23,268.92 after news broke of Tesla’s sale. It later regained losses and was last up 0.21 percent at $23,301.87.

Tesla also revealed it has converted approximately 75 percent of its bitcoin purchases into fiat currency, which added $936 million of cash to its balance sheet. Bitcoin stumbled late on Wednesday by as much as 0.5 percent after news broke of Tesla’s sale. It later regained losses and was last up 0.21 percent at $23,301.87

Musk has been an outspoken supporter of cryptocurrency. His statements on the future of the crypto space or disclosures about his ownership of digital assets often boost the price of dogecoin and bitcoin.

‘However, the Bitcoin losses point out an important part of the Tesla investment case – its eccentric owner. While Musk’s impressive innovation has served the company well, his personal flair is starting to raise governance questions,’ she added. 

Tesla accepted bitcoin as a form of payment for less than two months before stopping in May 2021. Musk has said the company could restart accepting bitcoin once it conducts due diligence on the amount of renewable energy to mine the currency.

Bitcoin has been in recovery mode so far this week in line with the stock market rally, as investors appear optimistic about the U.S. Federal Reserve’s ability to rein in decades-high inflation.

The earnings report comes just weeks after Musk abandoned his $44 billion takeover of Twitter, citing issues with fake accounts on the platform (file photo)

Meanwhile, Musk’s fallout with Twitter became more heated Tuesday after the social media giant accused the billionaire of ‘attempted sabotage’ after he pulled the plug on his $44 billion takeover bid.

Musk said earlier this month he no longer wanted to buy Twitter, claiming the firm had failed to uphold its side of the merger agreement by not disclosing enough information on fake accounts. 

But the platform is suing him to force him to complete the deal.

Twitter lawyer Bill Savitt of Wachtell, Lipton, Rosen & Katz, said Tuesday: ‘It’s attempted sabotage. He is doing his best to run Twitter down.’

‘He’s doing his best to create jeopardy for Twitter, is doing his best to create exposure for Twitter, and he’s doing that as a way to try and get out of the contract he promised to consummate.’

Twitter filed the lawsuit (above) on Tuesday in Delaware Chancery Court and will look forward to October for the expected start of the trial

Musk has made no secret of his criticism of Twitter, firing off tweets bashing the platform’s restrictions on free speech and failure to clamp down on fake accounts. 

In a war of words, lawyers for the San Francisco-based firm told a US court to fast-track its trial against Musk to September and said the takeover uncertainty is harming the platform ‘every hour of every day.’

But lawyers for Musk, who said the social media giant is seeking a ‘warp speed’ trial, called for the courtroom showdown to take place next February.

Chancellor Kathaleen McCormick of the Court of Chancery in Delaware largely granted Twitter’s wish as she set a five-day trial in October.