$TSLA Demand Is Booming. So Why Is Free Cash Flow Negative?
#1 EV car in the world, but this problem will destroy it soon:
I actually like $TSLA earnings a lot here:
Record Q2 deliveries: 480,126, up 25%
Demand roared back. After a soft Q1 of 358k, Tesla put up its best ever second quarter for deliveries with record volume in a long list of new markets. This kills the "demand is falling apart" narrative cold. Until this breaks, the demand bears are wrong.
But, they are spending a lot on capex and investments for future growth
CapEx exploded to $5.8B, up 142%
Here's the direct cause of that negative FCF. Tesla is spending like never before on AI compute, factories, lithium and semiconductors. I read this two ways at once, bullish if you believe the buildout pays off in robotaxi and Optimus, bearish if you care about near term cash. I lean toward "this is the price of the next chapter."
And I'm not too worried about their negative cash flow:
Free cash flow went NEGATIVE: -$1.1B
This made me sit up. Tesla burned cash this quarter, swinging from positive to negative. Operating cash flow was actually strong at $4.7B, up 85%, but capex swallowed all of it and then some. I'm not calling it a crisis, but the trend deserves watching!
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