Tesla Stock Falls as Elon Musk Tempers Cybertruck Expectations

Tesla Stock Falls as Elon Musk Tempers Cybertruck Expectations

In the latest news from Tesla, the company’s stock has experienced a decline as Elon Musk, the CEO, tempered expectations for the highly anticipated Cybertruck. Despite reporting earnings that missed expectations, Tesla initially saw a rally in its stock following the release of its third-quarter results. However, Musk’s comments during a call with analysts and investors dampened enthusiasm for the electric pickup truck. Musk stated that it would take between a year to 18 months for the Cybertruck to become a cash-flow contributor and highlighted the challenges they face in achieving volume production. While demand for the vehicle is high, Musk emphasized the need to make it affordable for consumers. This news comes as investors closely monitor Tesla’s financial performance and its ability to meet production targets.

▶ [Kucoin] Transaction fee 0% discount CODE◀

Tesla Earnings Report

Earnings miss

Tesla’s third-quarter earnings report revealed an earnings miss, disappointing investors who were expecting stronger financial results. The company reported earnings of $1.85 billion, or 53 cents a share, compared to $3.3 billion, or 95 cents a share, in the same period last year. Adjusted for one-time items, Tesla earned 66 cents a share. While revenue rose 9% to $23.35 billion, it fell short of analysts’ expectations.

Investor response

Following the earnings release, Tesla’s stock initially rallied, with shares rising as much as 2% after the bell. However, enthusiasm quickly waned as investors digested CEO Elon Musk’s comments on the company’s future prospects. As a result, Tesla’s stock experienced an after-hours drop of 4.2%. Musk’s tempered expectations for the Cybertruck contributed to the decline in investor sentiment.

Musk’s comments on Cybertruck

During the earnings call with analysts and investors, Elon Musk addressed the much-anticipated Cybertruck and tempered expectations for its impact on the company’s financials. Musk stated that it will take between a year and 18 months for the Cybertruck to become a cash-flow contributor. He also highlighted the challenges Tesla will face in reaching volume production for the electric pickup truck. Despite these challenges, Musk emphasized the significant demand for the Cybertruck, with over 1 million reservations received. He emphasized the importance of making the vehicle at an affordable price to meet customer demand.

Tesla’s Stock Performance

Initial gains

Immediately after Tesla’s third-quarter results were announced, the company’s stock experienced initial gains, rising as much as 2%. These gains were likely driven by the positive revenue growth and the anticipation surrounding the Cybertruck.

After-hours drop

However, following Elon Musk’s comments on the Cybertruck during the earnings call, Tesla’s stock experienced a significant decline in after-hours trading. The stock dropped 4.2% during this period, reflecting investors’ concerns about the challenges and timeline for the Cybertruck’s production and cash-flow contribution.

▶ [Kucoin] Transaction fee 0% discount CODE◀

Elon Musk’s Comments on Cybertruck

Tempering expectations

Elon Musk’s comments about the Cybertruck during the earnings call aimed to temper expectations regarding its timeline for production and cash-flow contribution. Musk stated that it would take between a year and 18 months for the Cybertruck to become a cash-flow contributor, highlighting the significant work required to achieve volume production.

Timeline for cash-flow contribution

Musk’s comments regarding the Cybertruck’s timeline for cash-flow contribution underscored the challenges Tesla faces in bringing the electric pickup truck to market. The lengthy timeline suggests that investors may need to exercise patience and temper their expectations for immediate financial impact from the Cybertruck.

Challenges in reaching volume production

In addition to the timeline for cash-flow contribution, Musk also acknowledged the challenges Tesla will face in reaching volume production for the Cybertruck. This recognition of the potential hurdles ahead may have contributed to the decline in investor sentiment and the after-hours drop in Tesla’s stock.

Demand for Cybertruck

Off the charts

Despite the challenges and tempered expectations, Elon Musk emphasized the exceptionally high demand for the Cybertruck. He stated that the demand for the electric pickup truck is “off the charts,” highlighting the strong interest from consumers.

Number of reservations

To further underscore the strong demand for the Cybertruck, Musk revealed that over 1 million people have already submitted reservations for the vehicle. This impressive number indicates significant interest in Tesla’s latest electric vehicle.

Focus on affordability

While emphasizing the high demand for the Cybertruck, Musk also stressed the importance of making the vehicle affordable. He acknowledged that it is not solely a demand issue but also a matter of producing the vehicle at a price people can afford. This focus on affordability aligns with Tesla’s mission to make electric vehicles accessible to a wider consumer base.

Production Expectations

Quarterly production estimate

When pressed for production expectations, Elon Musk stated that he expects Tesla to be able to produce a quarter of a million Cybertrucks per year by 2025. This estimate sets a long-term production goal for the electric pickup truck.

2025 production goal

Musk’s production goal of a quarter of a million Cybertrucks per year by 2025 indicates Tesla’s ambition to ramp up production and meet the high demand for the vehicle. Reaching this goal will require significant effort and overcoming various challenges, as acknowledged by Musk.

Musk’s Comments on the Economy

Criticism of high interest rates

During the earnings call, Elon Musk expressed criticism of high interest rates, suggesting that they pose challenges for companies operating in the current economic climate. His comments reflect concerns about the potential impact of high interest rates on Tesla’s ability to maintain growth and profitability.

Concerns about the global economy

In addition to high interest rates, Musk expressed concerns about the global economy. These concerns may be fueled by ongoing geopolitical tensions, supply chain disruptions, and other economic uncertainties. Musk’s comments highlight the potential risks and challenges that Tesla may face due to the broader economic landscape.

Overall health of the car industry

In discussing the economy, Musk also shared his views on the overall health of the car industry. His comments suggest a cautious outlook, emphasizing the need to navigate uncertainties and avoid excessive risk-taking. This cautious stance aligns with Tesla’s approach of maintaining sustainable growth and financial stability.

Third Quarter Earnings

Revenue and earnings comparison

Tesla’s third-quarter earnings report revealed a year-over-year decline in earnings, with the company earning $1.85 billion compared to $3.3 billion in the same period last year. The decline in earnings can be attributed to various factors, including increased expenses and production challenges.

Analyst expectations

Analysts were expecting Tesla to report adjusted third-quarter earnings of 73 cents a share on sales of $24.2 billion. However, the company fell short of these expectations, reporting adjusted earnings of 66 cents a share on revenue of $23.35 billion. While the revenue growth of 9% was positive, it was not enough to meet analysts’ projections.

Factors affecting gross margins

Tesla’s gross margins for the third quarter decreased from 18.2% in the second quarter to 17.9%. The decline can be attributed to a variety of factors, including price cuts, supply chain disruptions, and increased costs. These factors negatively impacted Tesla’s profitability for the quarter.

Tesla’s Factories

Cybertruck production in Texas

Tesla began pilot production of the Cybertruck at its manufacturing plant in Texas. This production milestone marks an important step towards meeting the high demand for the electric pickup truck. The first deliveries of the Cybertruck remain on track for later this year.

Model Y production plans

Tesla plans to gradually increase Model Y production at its factory in Austin, Texas. The company aims to carefully ramp up production to meet growing demand for its popular electric SUV. Similar plans for a ramp-up of Model Y production are also in place for Tesla’s Berlin plant.

Shanghai factory’s impact on deliveries

Tesla’s Shanghai factory, which has been successfully running near full capacity for several quarters, plays a crucial role in the company’s global deliveries. However, downtime at the Shanghai factory contributed to Tesla missing third-quarter delivery expectations. Despite this setback, Tesla anticipates continued strong production output from its Shanghai factory.

Outlook for Fourth Quarter

Maintaining growth rate

Tesla anticipates maintaining its growth rate in the fourth quarter, aiming to stay ahead of its long-term 50% compound annual growth rate. The company expects to produce approximately 1.8 million vehicles in 2023, reflecting its commitment to sustained growth and meeting customer demand.

Production projections

Although Tesla’s production projections for the fourth quarter were not explicitly provided, the company’s commitment to remaining ahead of its long-term growth rate suggests continued efforts to increase production capacity. These efforts are aimed at meeting the strong demand for Tesla vehicles and achieving the company’s ambitious production goals.

Tesla’s Stock Performance This Year

Stock gains

Despite the recent after-hours drop, Tesla’s stock has experienced significant gains throughout the year. The stock has more than doubled in value, vastly outperforming the broader market. This substantial increase in Tesla’s stock price highlights investors’ confidence in the company’s long-term prospects.

Comparison to S&P 500 index

While Tesla’s stock has seen impressive gains, its performance should be analyzed in the context of the broader market. Compared to the S&P 500 index, which has seen an advance of around 13% this year, Tesla’s stock has significantly outperformed. This outperformance demonstrates the strength of investor interest in the company and its potential for future growth.

In conclusion, Tesla’s recent earnings report revealed an earnings miss, disappointing investors and leading to a decline in the company’s stock price. Elon Musk’s comments on the Cybertruck tempered expectations for its timeline and highlighted the challenges Tesla faces in reaching volume production. Despite these challenges, demand for the Cybertruck remains strong, with over 1 million reservations received. Tesla’s stock initially experienced gains but ultimately dropped in after-hours trading. Looking ahead, Tesla aims to maintain its growth rate, increase production capacity, and meet the high demand for its vehicles. Despite the recent decline, Tesla’s stock has seen significant gains this year, outperforming the broader market.

▶ [Kucoin] Transaction fee 0% discount CODE◀