Liam Denning, Columnist

Tesla’s Market Cap Rises the More Its Margins Fall

An astonishing $534 billion increase so far this year is not even the half of it.

July 20, 2023 at 12:35 AM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

Charging ahead.
Photographer: Philip Pacheco/Bloomberg

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Tesla Inc.’s latest results gave bulls a lot of what they wanted: An earnings beat, tantalizing shots of the Cybertruck and an “internal projection of Dojo compute power,” referring to the in-house supercomputer. What they didn’t get was a satisfactory resolution to the defining question of the year: When will Tesla’s margins and market cap stop diverging?

The (non-GAAP) earnings beat of 10 cents in the second quarter was itself less than meets the eye — it was owed entirely to $417 million of “other income” and minority shareholder adjustments below the operating line. From that line and above, pressure from Tesla’s series of price cuts was far more evident. In a sense, the better-than-expected earnings served to highlight the weaker metrics further up the income statement.