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Tesla Beats in Q2 as Indexes Set New Closing Highs

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The Dow, S&P 500 and Nasdaq indexes all set fresh all-time closing highs to start off a new trading week, albeit relatively moderately. A week ago, we were experiencing the worst one-day sell-off in months on fears of the Delta variant of Covid-19 crimping Great Reopening plans. The market has since shed such a gloomy outlook, and followed Friday’s strong performance with finishes in positive territory.

Market indexes took different paths to all wind up in generally the same space by Monday’s closing bell. After starting off the trading day down around 100 points, the Dow recovered by midday and closed near sessions highs, +0.24%. The Russell 2000 did the opposite: starting off well into the green, the small-cap index pulled back as the day wore on, closing +0.33%. The S&P 500 match the Dow’s +0.24% while the Nasdaq barely eked out a +0.03% gain.

New Home Sales in June tumbled to a 14-month low — back to the early months of the pandemic era — and missing expectations by a wide margin. A total of 676K new homes were sold last month, well off the expected 795K and below the downwardly revised 724K reported for May. Sales fell -19.4% year over year, the first reported annual decrease of the pandemic era.

It’s the third straight month lower, as higher prices and supply constraints created headwinds and more expensive production costs. This has helped keep the number of new home buyers at lower levels than we had been seeing. However, in recent weeks, lumber costs have managed to come back down to earth, so perhaps we’ll see a rebound in new home sales in the coming months.

Shares of Tesla (TSLA - Free Report) initially popped on its Q2 earnings release after Monday’s close, as the world’s leading electric vehicle maker beat expectations on both top and bottom lines, but after-market trading cooled off rather quickly. Earnings of $1.45 per share easily surpassed the 90 cents expected in the Zacks consensus estimate. Revenues of $11.96 billion were well ahead of the $11.39 billion expected.

This marks Tesla’s seventh quarter of the past eight outperforming on the bottom line, including Q2 2020’s stellar 545% beat. Prior to this, Tesla had missed in 10 of the previous 15 quarters. Shares of the company hit an all-time high in January, but the stock has underperformed since. Year over year, Tesla is +109%. Shares rose 2% in regular trading ahead of the earnings report.

Operating cash flow minus capex came in at $629 million for the quarter, with cash and cash equivalents amounting to $16.2 billion. This includes a less-than-expected $23 million Bitcoin-related impairment. Stripping out credits, gross margins on auto sales came in at +25.8%. The company had earlier reported Q2 deliveries at just over 200K, up 8% quarter over quarter.

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