Tesla Stock Suffers Worst Week of the Year, Down 15%
Tesla stock had a rough week, falling more than 15% to close at $211.99 after CEO Elon Musk gave a gloomy view during the company’s third-quarter earnings call. Even though Tesla stock was still up an amazing 96% year-to-date, this drop was the worst week for the stock so far this year.
Tesla said it made $23.35 billion in sales and $1.85 billion in profits in the quarter that ended on September 30, 2023. These numbers, on the other hand, were lower than those from the previous quarter and from the same time last year.
Musk, who is known for having multiple jobs at Tesla, Twitter (now X), SpaceX, xAI, Neuralink, and The Boring Co., was very worried about the economy as a whole during the results call. He stressed how important it would be for Tesla to cut costs and lower prices in the next few quarters.
Musk also dampened hopes for Tesla’s long-awaited Cybertruck by not giving any details about the “robotaxi” and self-driving car technology that the company has been working on for years. This put Tesla behind the U.S. companies Cruise and Waymo and the Chinese company Didi, which is a big name in ride-hailing.
“We dug our own grave with Cybertruck,” Musk even said about the truck, implying that it could take up to 18 months before it becomes a “positive cash flow contributor,” despite the huge demand.
Musk said, “Demand is through the roof.” That’s not a problem because more than a million people have booked the car. But we have to make it, and we have to set a price that people can pay. Things that are insanely hard.”
Musk was positive about Tesla’s plans to keep putting money into AI research, but the market did not respond as positively as it had in the past. Analysts, who usually had a positive view of Tesla, put out cautious notes after the Q3 numbers. Colin Langan of Wells Fargo said, “No more rose-colored glasses,” and Adam Jonas of Morgan Stanley lowered his price target, which made people wonder about Tesla’s growth possibilities.
Bernstein’s Toni Sacconaghi, who doesn’t always believe Tesla’s hype, kept an underperform rating on the company and set a $150 price goal, which is 38% below the closing price. The expert wondered if the company’s story was broken because of its 5% growth in auto sales, falling margins, and high trading multiples.
Also, Tesla’s Q3 results caused waves in the electric vehicle (EV) market. After Tesla’s careful outlook, the shares of Chinese EV makers and other automakers also went down, which made people worry about the EV market as a whole.
Finally, Tesla’s stock dropped a lot after a disappointing earnings call during which CEO Elon Musk was negative about the economy and the problems the company’s products were having.
Even though the Cybertruck is in high demand, it’s still not clear if it will be profitable in the future. Also, the bad feelings about Tesla’s performance have hurt the EV market as a whole.
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