Tesla, the electric car giant, witnessed a significant drop in its stock value, with shares plunging by 9% after the company’s third-quarter results were released. The decline was further exacerbated by CEO Elon Musk’s cautious commentary on the global economic landscape and the future of Tesla’s highly anticipated Cybertruck.
Key Takeaways:
- Tesla’s shares dropped by 9% following the release of its third-quarter results.
- The company reported revenue of $23.35 billion and earnings of 66 cents per share, both falling short of Wall Street’s expectations.
- Elon Musk expressed concerns about the global economy and the high interest rate environment.
- Musk emphasized the need to make Tesla products more affordable.
- Analysts from Bank of America and Morgan Stanley voiced concerns about Tesla’s future growth and the broader economic environment.
Missed Expectations and Economic Concerns
Tesla’s third-quarter results revealed a revenue of $23.35 billion and adjusted earnings of 66 cents per share. Both figures missed the mark set by Wall Street analysts. This marks the first time since the second quarter of 2019 that Tesla has not met both earnings and revenue expectations.
During the company’s quarterly investor call, Musk voiced his apprehensions about the current state of the global economy. He highlighted the challenges posed by the high interest rate environment, which, according to him, makes it difficult for consumers to purchase cars. In response to these challenges, Musk stated that Tesla is focusing on reducing the costs of its vehicles. This cost-cutting initiative is being prioritized over the construction of a new factory in Mexico.
Cybertruck Production Challenges
Musk also took the opportunity to manage expectations surrounding the Cybertruck, Tesla’s futuristic pickup truck. He indicated that it might take a year or more before the Cybertruck becomes a significant contributor to the company’s cash flow. Musk acknowledged the challenges associated with mass-manufacturing the vehicle, candidly stating, “We dug our own grave with Cybertruck.”
Analysts Weigh In
The release of Tesla’s third-quarter results and Musk’s subsequent comments have sparked a flurry of reactions from analysts. Bank of America analysts maintained their neutral rating on Tesla’s stock but adjusted their estimates for the company’s fourth quarter and subsequent years, citing a “lower gross margin profile.” They also expressed surprise at the amount of time Musk dedicated to discussing the global economy during the call.
Morgan Stanley analysts, on the other hand, described the investor call as one of the most cautious they’ve heard from Tesla in years. They acknowledged the valid concerns about rising interest rates but also raised questions about potential competition and slowing demand for Tesla’s products.
Conclusion
Tesla’s recent stock dip and the cautious tone set by its CEO highlight the challenges and uncertainties faced by the electric vehicle industry. As the global economic landscape continues to evolve, companies like Tesla will need to navigate these challenges while continuing to innovate and meet consumer demands.