Tesla Stock Plummets After Earnings Fall Short; Profits Drop 45%

 

Tesla Shares Plunge After Disappointing Earnings Report

Tesla shares are experiencing their steepest drop since January following a disappointing quarterly earnings report and another decline in automotive revenue. The stock fell 11% by late Wednesday morning to $219.58, now down 12% for the year, while the Nasdaq has risen 17% during the same period.

On Tuesday, Tesla announced a 7% decline in auto revenue from the previous year, totaling $19.9 billion, with margins also decreasing. Although total revenue increased by 2% to $25.5 billion, the company has had to cut prices globally and offer discounts and incentives to combat slowing sales and increasing competition, particularly in China.

Tesla remains the leading electric vehicle seller in the U.S., but it is losing market share to new rivals due to its aging lineup of sedans and SUVs and CEO Elon Musk's controversial political commentary.

The company reported adjusted earnings of 52 cents per share for the second quarter, missing the average analyst estimate of 62 cents. Tesla’s adjusted operating margin also dropped to its lowest in three years, falling to 14.4% from 18.7% a year earlier, marking the fourth consecutive quarter of decline.

Investors are keenly watching for when Tesla will introduce a new mass-market car to revitalize its vehicle lineup. Musk indicated on the earnings call that Tesla aims to deliver a new "affordable" car in the first half of next year.

Robotaxis were also a major topic during the call. Musk envisions a future where Tesla owners can authorize their vehicles to operate autonomously in a ride-hailing service similar to Uber. When asked about the timeline for the first robotaxi ride, Musk expressed optimism, saying, "I would be shocked if we cannot do it next year."

However, Musk has a track record of setting ambitious timelines and not always meeting them. On Tuesday, he postponed the company's robotaxi event to October, after initially scheduling it for August, citing a desire to make significant improvements to the vehicle. He mentioned that Tesla plans to reveal "a couple of other things" but did not provide further details.

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