Tesla stock (TSLA) sank 9.3% to its lowest level in nearly two months, after the electric vehicle maker missed on earnings and CEO Elon Musk’s concerns about the global economy, future of its Mexico Gigafactory, and challenging Cybertruck ramp-up weighed on shares.
For the third quarter, Tesla reported top-line revenue of $23.4 billion, missing analysts’ estimates of $24.06 billion; however, revenue did climb 13% from a year ago. From a profitability standpoint, Tesla reported adjusted earnings per share (EPS) of $0.66 versus $0.74 expected and adjusted net income of $2.3 billion versus $2.56 billion expected.
The drop in profitability could be attributed to expected downward pressure on margins since Tesla began its cost-cutting efforts late last year. Tesla reported a Q3 gross margin of 17.9%, slightly missing Wall Street estimates of 18.0%. Last quarter Tesla reported a gross margin of 18.2%.
“The quarter itself delivered auto [gross margin] (ex credits) of 16.3% vs. the Street at 17.6% with margins that should stabilize over the coming quarters however Tesla is not committing to the end of price cuts and that is a big problem and overhang for the stock in the near-term,” Wedbush analyst Dan Ives wrote in a note published Thursday morning. Wedbush lowered its Tesla price target to $310 from $350 following Q3 earnings.
Looking ahead to future products, Tesla revealed Cybertruck deliveries remain on track for later this year, with deliveries beginning on Nov. 30. On the conference call, Musk said it would take a year to 18 months before the Cybertruck would be cash-flow positive and that by 2025 he expected a production run rate of 250,000 units a year. Musk added that Tesla would face “enormous challenges” in reaching volume production of the Cybertruck.
From Tesla’s Q3 2023 shareholder deck. (Tesla) (Tesla)
“We believe the 3Q report will add to near-to-intermediate term investor concerns given company commentary that the current macro backdrop/higher rates could gate its growth (including how quickly it ramps factories), and comments that the initial Cybertruck…
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