How Big of a Problem Is Tesla's Shrinking Gross Margin?
Electric vehicle maker Tesla (NASDAQ: TSLA) has been reducing its prices to help stimulate more revenue growth. And the move has paid off, with the company posting a strong second-quarter earnings report on July 19 that saw its sales climb nearly 50% year over year. The problem, however, is that with lower prices, the company's margins have been shrinking. Below, I'll look at how much they have shrunk recently and how serious a problem this poses for Tesla's shareholders.
For the second quarter, gross profit of $4.5 billion was just 18% of total revenue ($24.9 billion). Although the top line showed strong year-over-year growth of 47%, gross profit increased just 7% for the period.
Source Fool.com
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