"Tesla's Q2 earnings report is out! Tesla's revenue hit $28.24 billion, significantly beating expectations, with 480,000 vehicle deliveries—a 25% year-over-year increase. The rebound in sales is real. But adjusted EPS came in at just $0.33, below the expected $0.51, showing that the sales growth hasn’t smoothly translated into profits. Gross margin dropped from 17.2% to 16.8%, and operating margin fell further from 4.1% to 1.4%. Price cuts, promotions, and investments in new ventures are squeezing profitability. Free cash flow was negative $1.09 billion. While better than the market’s earlier concerns, it still reflects heavy investments in AI, Robotaxi, Optimus, and new production lines. I looked into the reasons behind the drop in gross margin, profits, and cash flow losses: 1. The decline in gross margin is because Tesla used a lot of financial products in Q2 to boost sales, like 8-year interest-free financing—Tesla has to cover these costs. 2. The drop in profits is due to Tesla’s investments in autonomous taxis, AI, computing power, factories, etc. Continuous spending has eaten up profits, causing them to fall. Similarly, the cash flow loss is also due to excessive investments. Tesla’s stock is down, and its close sibling SpaceX might not have a good day tomorrow either. Let’s see if Tesla mentions SpaceX during the earnings call. Buy U.S. stocks on MSX @msx_cn