Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Friday.
Today is Friday, April 24th.
Tesla reported earnings Wednesday after the market closed, and yesterday was the first day of trading on those results.
I get so many questions about Tesla that I figured I'd take a few minutes to walk through what the numbers actually say.
The Numbers
Revenue came in at $22.9 billion, up 15.8% year over year.
Net income was $477 million, up from $400 million — about 17% growth.
You always want to see the bottom line growing faster than the top line, because that speaks to efficiency and scale economics.
Gross margin improved to 21.1% from 20.1% — up a full percentage point.
And for the EV enthusiasts in the room, Tesla ended Q1 with what they called their highest Q1 order backlog in two years.
Solid numbers all around.
The Quiet Elon
A lot of people noticed that Elon seemed subdued on the earnings call.
There's probably a simple explanation for that.
The SpaceX IPO is coming, and before any IPO there is what we call a quiet period — an SEC-mandated window of roughly 40 days where executives have to be extremely careful about what they say publicly.
Nobody wants a hundred lawsuits.
So this was a deliberately muted Elon, and that makes complete sense.
The Astonishing Shrinking of an EV Company
Reading through the results, what struck me most was something bigger than any single number.
This is an ever-shrinking EV company.
And I mean that as an observation, not a criticism.
Look at what the board is actually telling Elon to focus on.
The compensation package they approved ties two thirds of his compensation to robo taxis and Optimus robots.
Just one third is EVs.
He is literally taking old EV manufacturing plants and retooling them to build Optimus robots.
He is building his own chip factory — the Tesla Terra Fab at Giga Texas — because he cannot get enough semiconductors from Nvidia to meet his own demand.
He sat down with Jensen Huang and said he needed more chips.
Jensen said I'd love to help you, but I have Google and Meta and Amazon all in line ahead of you.
So Elon did what Elon does.
He decided to build his own.
He believes his chips will eventually cost 90% less than buying from Nvidia.
I'll admit I wonder quietly whether he's fully accounting for the capital expenditures involved in that math.
But whatever.
The Eisenhower Analogy
Here is what this actually reminds me of.
You know those World War II documentaries where you see Eisenhower and his generals spread out over their maps, working through how to cross the channel and take Normandy?
They're worrying about supply chains, logistics, enemy positions — an operation of staggering complexity.
That is what Elon is doing right now.
He is taking factories that make one thing and retooling them for another.
He is scaling chip manufacturing while simultaneously launching rockets and running satellite services.
And he just told investors to expect $25 billion in capital expenditures over the next two to three years.
$25 billion.
He is essentially starting a new company inside an existing one.
What Business History Says
Most of the time, Wall Street runs away from operations this complex.
Companies in the middle of this kind of transition usually get hammered.
The stock trades like dead money for two or three years while the transformation plays out.
Then, when real traction emerges, the money comes flooding back.
The difference here is Elon Musk.
There is still insane investor interest despite the complexity, despite the risk, despite the execution challenges.
Business history says very few companies pull off transitions like this successfully.
But very few companies have had Elon Musk at the helm.
How would you ever bet against him?
Anyway, that's all I have for today.
Have a wonderful, wonderful weekend.
Enjoy special time with your family and do whatever it is you do to relax.
I will see you Monday.
“The Buck Stops Here,”
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Written by Dylan Jovine