Tesla Stock Falls 5% as Q3 Results Miss Expectations
Tesla’s Quarterly Performance
Tesla (NASDAQ:) has reported its quarterly results, falling short of Wall Street estimates. The company’s recent wave of electric vehicle price cuts has impacted margins, leading to a 5.5% drop in Tesla shares during pre-open trading on Thursday.
The adjusted earnings per share (EPS) for the third quarter came in at $0.66, with revenue totaling $23.35 billion. This missed analysts’ expectations of $0.73 EPS and $24.32 billion in revenue.
One key factor affecting Tesla’s margins was the decrease in gross margins excluding credits, which declined to 16.1% in Q3 from 18.7% in Q2. This decline was closely watched, given the recent price cuts in electric vehicles.
In terms of production, Tesla delivered 435,000 electric vehicles in Q3, down from 466,140 in Q2. The company attributed this decrease to upgrades at various factories, which temporarily impacted production volumes.
Cautious Commentary by CEO Elon Musk
Following the release of the results, Tesla’s CEO Elon Musk expressed concerns about the current high interest rate environment, making it more challenging for people to afford Tesla’s vehicles.
Musk emphasized the importance of cost and the need to make their products more affordable. He also provided cautious commentary on the Cybertruck, stating that it will require significant work to reach volume production and positive cash flow. Musk estimated that it will take between a year to 18 months before the Cybertruck becomes a significant cash flow contributor.
Analyst Concerns and Revised Price Targets
Wall Street analysts are increasingly concerned about Tesla’s near-term outlook, especially in light of Musk’s comments. Goldman Sachs analysts lowered their price target by $30 to $235 per share, citing concerns about the macroeconomic environment and the potential slow ramp-up of the Cybertruck.
Citi analysts also reduced their price target from $271 to $255 per share, noting that the results were worse than anticipated. They expect Tesla’s shares to come under pressure as a result.
Conclusion
Tesla’s Q3 results fell short of expectations, with the company facing challenges related to margin pressures and production upgrades. CEO Elon Musk’s cautious commentary further added to concerns about Tesla’s near-term growth prospects. Wall Street analysts have revised their price targets downward, reflecting their worries about the company’s future performance.
