Tesla (TSLA) experienced disappointing earnings and revenue results, leading to a drop in TSLA shares. On Wednesday, Tesla reported a 37% decrease in third-quarter earnings to 66 cents per share, the lowest figure in two years for CEO Elon Musk. However, the quarterly revenue saw a 9% increase to $23.35 billion. Tesla’s gross profit margin also fell to 17.9%, causing concern among analysts. The company’s auto gross profit margins (excluding regulatory credits) decreased to 16.3%. Analysts predicted a 30% drop in Tesla’s EPS to 73 cents, with revenue expected to rise by 13% to $24.18 billion. They also anticipated that Tesla profit margins would remain below their self-described “floor,” as there were fears of surprise price cuts in the final months of 2023. Tesla revealed that operating expenses had risen due to the Cybertruck, artificial intelligence initiatives, and other projects. The company stated that the Cybertruck was in pilot production and on track for initial deliveries on November 30. However, Musk warned investors during the Q3 earnings call that the Cybertruck would take between one and 18 months before becoming a significant positive cash flow contributor and that there would be enormous challenges in reaching volume production. Tesla has not yet released prices or key specs that may impact Cybertruck demand and profitability. The company also mentioned making progress on its next-generation platform and teased a vehicle silhouette at its annual shareholder meeting. Musk stated that Tesla planned to begin construction at its Mexico plant but would evaluate the global economy before moving forward. Tesla stock initially rose after the Cybertruck delivery event but fell 9% on Thursday due to the lackluster earnings call. In early October, Tesla reported that it had delivered 435,059 vehicles in the third quarter, falling short of expectations and marking a 6% decline compared to Q2. The delivery miss was followed by price cuts to U.S. Model 3 and Model Y vehicles, which surprised Wall Street. To maintain sales momentum, Tesla has aggressively reduced vehicle prices throughout the year, resulting in lower auto gross profit margins. Wall Street analysts were focused on Tesla’s margin performance in Q3. Despite these challenges, analysts expect growth initiatives such as the Cybertruck to positively impact Tesla’s future. However, TSLA stock has been retreating and falling below key technical levels. Analysts have adjusted their price targets for Tesla stock but maintain that the United Auto Workers strike against Ford, General Motors, and Stellantis is advantageous for Tesla. Tesla stock is currently ranked fourth in the IBD automaker industry group.
