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Tesla Earnings Preview: Berlin Buildout, Bitcoin, Profit Margins in Focus

Record revenues of more than $11.4 billion are forecast for the clean-energy carmaker when it reports second quarter earnings after the closing bell, but focus now shifts to its Berlin expansion plans and improving profit margins.

Tesla Inc.  (TSLA) - Get Tesla Inc Report shares edged higher Monday ahead of the clean-energy carmaker's second quarter earnings report with investors focused on profit margins and expansion plans.

Tesla is forecast to post a second-quarter bottom line of 98 cents per share, a 122% increase from the same period last year, on record revenues of $11.3 billion when it reports after the close of trading today. 

Tesla delivered 201,250 new cars over the three months ended in June, the company reported on July 2, a record total that included the production of 199,360 Model 3s and Model Ys and was a 9% improvement from the previous quarter. 

The tally takes Tesla's first half delivery total to around 386,000, leaving it facing the prospect of two more record quarters to reach the Street consensus of 860,000 deliveries for the year.

New production facilities in Austin, Texas and Berlin would have certainly added the installed capacity to meet that target, but delays, particularly in the German capital, could mean the new gigafactories may not come fully online until next year. 

"With expansion in Shanghai, and new facilities in Texas and Berlin, we estimate Tesla will exit 2021 with installed capacity of 1.44 million units vs. 1.05 million currently," said Credit Suisse analyst Dan Levy, who carries a neutral rating with an $800 price target for the stock.

"Of the capacity launches, we believe Berlin is highest priority – enabling Tesla to cut price and thus better capitalize on the Europe EV opportunity, which is ground zero for global EV inflection," he added.

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Tesla shares were marked 2.3% higher in early trading Monday to change hands at $658.30 each, a move that would trim the stock's year-to-date decline to around 6%.

Investors will be looking for updates on both facilities in the conference call that follows Tesla's second quarter earnings later this evening, as well as anticipated improvements in profit margins over the three months ending in June.

Another focus for investors, particularly those skeptical of the company's reliance on regulatory credits to flatter its bottom line, will be on the sales mix and cost inputs linked to the global semiconductor shortage and related supply chain disruptions.

Last quarter, Tesla also earned earned just over $100 million from the sale of cryptocurrenty it purchased earlier this year, noting that "its operating income of $594 million was helped by "year over year, positive impacts from volume growth, regulatory credit revenue growth, gross margin improvement driven by further product cost reductions and sale of bitcoin."

Under U.S. accounting rules, Tesla's bitcoin holdings must be held as a so-called 'intangible' asset on its corporate balance sheet. That means that, like the value of "goodwill", it can't be increased. 

However, it can be marked down when bitcoin prices decline, leaving Tesla's stock price at least partly-linked to bitcoin fluctuations.

Telsa founder and CEO Elon Musk said last week that his company will "most likely" resume accepting bitcoin as payment after he declared a pause earlier this spring amid concerns over the environmental impact of bitcoin mining.

"I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting bitcoin" Musk told last week's B Word conference.