Tesla shares fall after quarterly profit misses expectations

Tesla shares fell in after-hours trading after the company reported weaker-than-expected quarterly profit, saying lower vehicle prices weighed on results despite higher auto sales.

The electric vehicle maker reported second-quarter profit of $1.1 billion, about five percent lower than a year earlier. Earnings were 33 cents per share, below analyst estimates of 53 cents per share. Revenue rose 26 percent to $28.2 billion.

Tesla had earlier reported stronger-than-expected second-quarter auto sales, partly due to a recovery in European markets. In its earnings release, the company said profitability was hurt by lower vehicle sales prices, lower revenue from regulatory credits and an unspecified vendor cell issue that increased energy warranty-related charges.

Tesla said its expansion projects were in line with plans. It said it had begun production of its Cybercab vehicle in Texas and that production of the Tesla Semi remained on track for this year. The company also reported more subscribers to its FSD driver-assistance program, which lifted revenue.

Chief executive Elon Musk was expected to face questions on a conference call about Tesla's large capital spending plans. Tesla has said it plans to spend more than $25 billion on autonomous transport, humanoid robotics and artificial intelligence. The company said it was in its largest period of investment and remained focused on long-term value creation.

The report was Tesla's first earnings announcement since Musk launched SpaceX as a publicly traded company in June. SpaceX shares rose sharply in their first sessions and temporarily lifted Musk's fortune above $1 trillion, before cooling in later weeks. SpaceX's valuation of about $1.5 trillion has prompted speculation among Wall Street investors about a possible combination between SpaceX and Tesla.

SpaceX President Gwynne Shotwell said in June that a combination might make Musk's life easier and said there were synergies between Tesla and SpaceX. CFRA analyst Garrett Nelson said the possible combination was a major question around Tesla, though he did not expect detailed comments from Musk or others.

Nelson said investors were also likely to ask when Tesla's heavy capital spending would begin to pay off. He said the concern was that the company could be starting a multi-year spending spree and had not been very transparent with investors about expected returns.

Tesla's technology has also faced renewed scrutiny after a June crash in Katy, Texas, where a Tesla Model 3 crashed at high speed into a home, killing a resident. Local authorities charged the driver with manslaughter.

Questions also remain about when Tesla's autonomous driving systems will be adopted widely. Musk has repeatedly predicted broad near-term use, but those predictions have not materialized. Deutsche Bank said in a recent note that Tesla's robotaxi rollout in Austin, Texas, had been slower than expected, with wait times possibly linked to vehicle availability.

Tesla shares dropped 2.4 percent in after-hours trading.