After the opening of the US stock market on Thursday (October 19th), Tesla's stock price significantly declined, dropping 9.8% to $218.67 per share during the period. It has now narrowed its decline slightly to $221.50, with a market value of approximately $67 billion evaporated from yesterday.
After Wednesday's trading session, the electric vehicle leader announced its latest financial results: Q3 revenue of $23.35 billion, adjusted earnings per share of $0.66, lower than market expectations of $24.1 billion and $0.73, respectively. This is the first time since Q2 2019 that the company has both fallen short of expectations.
The report also shows that Tesla's net profit in the third quarter was only $1.853 billion, a year-on-year decrease of 44%; The gross profit margin also dropped to 17.9%, from 25.1% in the same period last year; In addition, its once leading operating profit margin in the industry has also halved to 7.6%, on par with many traditional automakers.
These data all reflect the negative impact of significant car price reductions on profits. Even so, Tesla CEO Elon Musk said in a conference call, "The importance of cost cannot be overemphasized... We must make our products more affordable so that people can afford them
Musk explained, "I am concerned about the high interest rate environment we are in. Car buyers are concerned about how much money they need to pay back each month. If interest rates remain high or even higher, it will be much more difficult for people to buy cars
In addition, Musk also made cautious comments on the electric pickup truck Cybertruck and the Mexican super factory. He believes that Cybertruck will take 12 to 18 months to become an important positive cash flow contributor, and due to the global economic situation, the company is not yet ready to "fully" build the Mexican factory.
After the conference call, Bank of America analysts reiterated their neutral rating on Tesla's stock and lowered their expectations for the stock price given the "low gross profit margin." Interestingly, Musk has invested a lot of time studying the broader macro environment and the impact of current high interest rates
Other analysts also expressed some surprise that Musk has invested so much time discussing the global economy. Morgan Stanley analysts stated that Tesla's third-quarter performance was disappointing, and cautious comments surrounding the economy set the tone for the stock's reaction. "This is the most cautious Tesla call we have heard in years
Within the day, Daimo lowered its Tesla target price from $400 per share to $380. In addition, Wells Fargo, Citigroup, and Tesla's "majority" Wedbush have also lowered their target prices to between $250 and $310.
Deutsche Bank analysts wrote that a series of evidence has "strengthened our concerns about the fundamental challenges the company faces next year".